Scuttle for shelter: flight-to-safety and political uncertainty during the Spanish Second Republic Articles uri icon

publication date

  • August 2022

start page

  • 423

end page

  • 447


  • 3


  • 26

International Standard Serial Number (ISSN)

  • 1361-4916

Electronic International Standard Serial Number (EISSN)

  • 1474-0044


  • The Spanish Second Republic was a unique experiment of democratization in interwar Europe, which was characterized by extreme levels of political uncertainty. We find that investors responded to shifts in uncertainty by selling stocks in favor of government bonds -a behavior known as flight-to-safety. Additionally, we find that political uncertainty caused stock market stress and induced significant differences in the cross-section of expected stock returns, consistent with the exposures to political uncertainty. The fact that investors recurrently scuttled to shelter into government bonds suggests that they did not perceive a radical change in the political regime as an immediate and credible threat.


  • Economics
  • History
  • Politics