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Art and the Economy: A First Look at the Market for Paintings in Turkey

  • Erdal Atukeren

    ()

    (ETH Zurich, KOF - Swiss Institute for Business Cycle Research)

  • Aylin Seçkin

    ()

    (Istanbul Bilgi University)

We investigate the relationships between the return on investments in paintings and other financial investments in Turkey. To this aim, we estimate a hedonic price index for a portfolio of Turkish painters. We find that investing in the market for paintings is a viable alternative even in an environment of high inflation and large macroeconomic volatility. The portfolio under investigation yielded a small but positive real return. Still, stock market returns are higher than the returns in the art market. Furthermore, we find a rather high correlation between stock returns and art market returns. However, the returns to investing in paintings are negatively correlated with the returns on traditional investment alternatives in a developing country context, such as foreign exchange, gold, and bank deposits. Hence, there might exist some room for portfolio diversification. Nevertheless, the time horizon of the investments is a key factor especially in portfolios involving art objects.

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Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 26 (2006)
Issue (Month): 3 ()
Pages: 1-13

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Handle: RePEc:ebl:ecbull:eb-06z10130
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  1. Stein, John Picard, 1977. "The Monetary Appreciation of Paintings," Journal of Political Economy, University of Chicago Press, vol. 85(5), pages 1021-35, October.
  2. Jianping Mei & Michael Moses, 2002. "Art as an Investment and the Underperformance of Masterpieces," American Economic Review, American Economic Association, vol. 92(5), pages 1656-1668, December.
  3. Kathryn Graddy & Orley Ashenfelter, 2002. "Auctions and the Price of Art," Economics Series Working Papers 131, University of Oxford, Department of Economics.
  4. Douglas Hodgson & Keith Vorkink, 2004. "Asset pricing theory and the valuation of Canadian paintings," Canadian Journal of Economics, Canadian Economics Association, vol. 37(3), pages 629-655, August.
  5. Goetzmann, William N, 1993. "Accounting for Taste: Art and the Financial Markets over Three Centuries," American Economic Review, American Economic Association, vol. 83(5), pages 1370-76, December.
  6. Robert J. Shiller, 1991. "Arithmetic Repeat Sales Price Estimators," Cowles Foundation Discussion Papers 971, Cowles Foundation for Research in Economics, Yale University.
  7. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
  8. Richard J. Agnello, 2002. "Investment Returns and Risk for Art: Evidence from Auctions of American Paintings," Eastern Economic Journal, Eastern Economic Association, vol. 28(4), pages 443-463, Fall.
  9. Orley Ashenfelter & Kathryn Graddy, 2003. "Auctions and the Price of Art," Journal of Economic Literature, American Economic Association, vol. 41(3), pages 763-787, September.
  10. Olivier Chanel & Louis-André Gérard-Varet & Victor Ginsburgh, 1996. "The relevance of hedonic price indices," Journal of Cultural Economics, Springer, vol. 20(1), pages 1-24, March.
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