TY  - JOUR
AU  - Hall,George J.
TI  - Exchange Rates and Casualties During the First World War
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9261
PY  - 2002
Y2  - October 2002
UR  - http://www.nber.org/papers/w9261
L1  - http://www.nber.org/papers/w9261.pdf
N1  - Author contact info:
George Hall
Department of Economics, Mail Stop 21
Brandeis University
 P.O. Box 549110
415 South Street
Waltham, MA 02454-9110
Tel: 781-736-2242
Fax: 781- 736-2269
E-Mail: ghall@brandeis.edu
AB  - I estimate two factor models of Swiss exchange rates during the FirstWorldWar. I have data for five of the primary belligerents: Britain, France, Italy, Germany, and Austria-Hungary. At the outbreak of the war, these nations suspended convertibility of their currencies into gold with the promise that after the war each would restore convertibility at the old par. However, once convertibility was suspended, the value of each currency depended on the outcome of the war. I decompose exchange rate movements into a common trend, a common factor, and country-specific factors. Movements in the common trend are consistent with the quantity theory of money. The common factor contains information on contemporaries' expectations about the war's resolution. Innovations to this common factor are correlated with time series on soldiers killed, wounded, and taken prisoner.
ER  -