Military Casualties and Exchange Rates during World War I : Did the Eastern Front Matter?

Although ultimately decided in the West, historians have continued to emphasize the importance of the Eastern Front in understanding the complex evolution of the First World War. Using a newly compiled dataset on prisoners of war and on soldiers killed and wounded on the Eastern and Western Fronts of the war, this paper provides evidence that foreign exchange traders considered information on military casualties from both fronts in decisions to buy and sell, indicating the significance of the two-front war a hundred years ago. Prospects of losing the war were associated with currency depreciation. Casualties from the Eastern Front mattered especially in the early years of the war