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The 1980s Price Bubble on (Post) Impressionism

Author

Listed:
  • Fabian Bocart

    (Universite Catholique de Louvain, Institut de Statistique, Biostatistique et Sciences Actuarielles, Voie du Roman Pays 20, 1348 Louvain-La-Neuve, Belgium)

  • Ken Bastiaensen
  • Peter Cauwels

    (ETH Zurich, Department of Management, Technology, and Economics, Zurich, Switzerland)

Abstract

The Log Periodic Power Law is a model used to define and measure speculative bubbles. This model has proven useful to track bubbles and even predict crashes of liquid asset classes. Using this methodology coupled with properties of cointegration between stocks and art, the 1980s price bubble on Impressionism and Post-Impressionism is analyzed. It is shown formally that there was a bubble in this market between 1986 and 1989. However, when denominating the art index in JPY rather than in USD, no price bubble behaviour was found at all. This observation suggests that Japanese buyers never felt that they were riding a bubble. Despite popular beliefs, no evidence is found that Japanese buyers viewed art as a speculative vehicle instead of a more classic consumption good that was related to their own cultural heritage.

Suggested Citation

  • Fabian Bocart & Ken Bastiaensen & Peter Cauwels, 2011. "The 1980s Price Bubble on (Post) Impressionism," ACEI Working Paper Series AWP-03-2011, Association for Cultural Economics International, revised Nov 2011.
    • Handle: RePEc:cue:wpaper:awp-03-2011
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    References listed on IDEAS

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    More about this item

    Keywords

    Impressionism; art market; hedonic regression; LPPL; bubble;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation
    • Z11 - Other Special Topics - - Cultural Economics - - - Economics of the Arts and Literature

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