The Market for Fine Art and the Economy

Abstract

This article examines the relationship between the market for art and the economy. The art market has long been an alternative investment for investors seeking capital appreciation as well as enjoyment from the art. Although the market for art has been studied in the financial and economic literature, no studies have looked at the relationship between the economy and the market for art. In this study, economic variables such as inflation, unemployment, the stock market, and interest rates are used to determine how the art market is affected by the economy. Time series regressions are used to establish the relationship and to quantify the effects. An art index is gathered from Art Market Research data. This study finds a strong relationship between the market for art and the economy. In general, the results show that as the economy expands, the market for art improves. There is some evidence of a negative relationship between the stock market and art market in the near term and of a positive relationship when the stock market is lagged two months.