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Modelling South African Art Prices: An analysis of post-2000 price behaviour

Author

Listed:
  • Laurie Binge

    () (Department of Economics, University of Stellenbosch)

  • Willem H Boshoff

    () (Department of Economics, University of Stellenbosch)

Abstract

The South African art market has grown markedly over the last two decades, and yet there is currently very little research on this market. This paper aims to make three contributions to the literature. The first is to estimate new quality-adjusted price indices for South African art since the turn of the millennium. The paper estimates central tendency indices, as a baseline for comparisons, as well as various hedonic indices that control for quality-mix or compositional changes over time. The second contribution is to estimate alternative art price indices by applying a simple hybrid repeat sales method to art prices. This approach addresses the problem of lack of repeat sales observations in the data and to some extent the potential omitted variable bias inherent in the hedonic method. This has not been attempted for art prices in any country. The hedonic and hybrid repeat sales indices seem to point to the same general trend in South African art prices. According to these measures, the South African art market experienced a huge price increase in the run-up to the Great Recession. The third contribution of the paper is to study the art price indices for evidence of a bubble in the South African art market over the period. The hedonic and hybrid repeat sales indices seem to point to consistent evidence of mildly explosive price behaviour in the run-up to the Great Recession.

Suggested Citation

  • Laurie Binge & Willem H Boshoff, 2016. "Modelling South African Art Prices: An analysis of post-2000 price behaviour," Working Papers 18/2016, Stellenbosch University, Department of Economics.
  • Handle: RePEc:sza:wpaper:wpapers274
    as

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    File URL: https://www.ekon.sun.ac.za/wpapers/2016/wp182016/wp-18-2016.pdf
    File Function: First version, 2016
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    References listed on IDEAS

    as
    1. Mehmet Balcilar & Rangan Gupta & Nico Frederick Katzke, 2015. "Identifying Periods of US Housing Market Explosivity," Working Papers 15-03, Eastern Mediterranean University, Department of Economics.
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    5. Collins, Alan & Scorcu, Antonello & Zanola, Roberto, 2009. "Reconsidering hedonic art price indexes," Economics Letters, Elsevier, vol. 104(2), pages 57-60, August.
    6. Eurostat, 2013. "Handbook on Residential Property Prices Indices," World Bank Publications, The World Bank, number 17280, June.
    7. Caspi, Itamar, 2013. "Rtadf: Testing for Bubbles with EViews," MPRA Paper 58791, University Library of Munich, Germany, revised 06 Sep 2014.
    8. Charles W. Calomiris & Jonathan Pritchett, 2016. "Betting on Secession: Quantifying Political Events Surrounding Slavery and the Civil War," American Economic Review, American Economic Association, vol. 106(1), pages 1-23, January.
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    More about this item

    Keywords

    South African Art; Hedonic Price Index; Pseudo Repeat Sales; Explosive Prices;

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • Z11 - Other Special Topics - - Cultural Economics - - - Economics of the Arts and Literature

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