Art in Times of Crisis

CentER Discussion Paper Series Nr. 2021-026

72 Pages Posted: 28 Sep 2021 Last revised: 3 Nov 2021

See all articles by Géraldine David

Géraldine David

Bibliotheca Wittockiana

Yuexin Li

Tilburg University - Department of Finance

Kim Oosterlinck

Université Libre de Bruxelles - SBS-EM, CEB

Luc Renneboog

Tilburg University - Department of Finance; European Corporate Governance Institute (ECGI); Tilburg Law and Economics Center (TILEC)

Date Written: September 23, 2021

Abstract

Art is often presented as an investment of last resort or a potential safe haven in times of political or financial distress. Yet, as no study has focused on the performance of art markets in times of crisis, this paper fills this gap by means of unclosing historical auction archives. We trace the long-term performance of the UK art market, which we relate to periods of crisis such as the World Wars, economic recessions, inflationary periods, and changes in monetary policy. By constructing an art price index from 1908 to 2016, we show that the value of British art expanded more than seven-fold over this century. We classify crises into economic & financial crises, systemic ones, and war periods. The results show that art outperformed equities and other financial assets in war times, which implies that it could serve as a hedge against political uncertainties. However, in times of economic and financial crises the art market underperformed the equity market. We also detail changes in art preferences for specific paintings’ sizes, art schools, art objects’ liquidity, art (price) segments, and art(ist)’s nationality across crises.

Keywords: art markets, art price, auction, monetary policy, systemic risk, political risk, wars, financial distress, inflation, cultural economics, economic history

JEL Classification: G01, G11, Z11, E30, N14, N24, N44

Suggested Citation

David, Géraldine and Li, Yuexin and Oosterlinck, Kim and Renneboog, Luc, Art in Times of Crisis (September 23, 2021). CentER Discussion Paper Series Nr. 2021-026, Available at SSRN: https://ssrn.com/abstract=3929327 or http://dx.doi.org/10.2139/ssrn.3929327

Géraldine David

Bibliotheca Wittockiana ( email )

Yuexin Li (Contact Author)

Tilburg University - Department of Finance ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Kim Oosterlinck

Université Libre de Bruxelles - SBS-EM, CEB ( email )

50 Avenue Roosevelt, CP114/03
Brussels 1050
Belgium

Luc Renneboog

Tilburg University - Department of Finance ( email )

P.O. Box 90153
Warandelaan 2
5000 LE Tilburg
Netherlands
+13 31 466 8210 (Phone)
+13 31 466 2875 (Fax)

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Tilburg Law and Economics Center (TILEC)

Warandelaan 2
Tilburg, 5000 LE
Netherlands

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