Class Year

2016

Date

4-15-2016

Document Type

Thesis

Distinguished Thesis

Yes

Degree Name

Bachelor of Arts (BA)

Department or Program

Economics

Second Department or Program

International Relations

First Advisor

Carolyn Tuttle

Second Advisor

James Marquardt

Third Advisor

Robert Lemke

Fourth Advisor

Aleksandar Jankovski

Abstract

While different scholars agree that war has a significant impact on the volatility in the United States stock market, they come to contradictory findings on the direction of this impact. The goal of this thesis is to analyze the effects that war has on the returns in U.S. financial markets. The empirical study employs quarterly prices of the Dow Jones Industrial Average index from October 1960 to September 2015 and applies a time series model in order to determine the effects on stock prices during U.S. war involvements overseas. Results show that even though the entry of United States into war has a positive effect on the quarterly returns from the Dow Jones Industrial Average index, different types of war can have an increasing or decreasing impact on DJIA real returns. This has important implications for investors today and in the future.


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