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How Did Japanese Investments Influence International Art Prices?

Published online by Cambridge University Press:  08 October 2009

Takato Hiraki ,
Akitoshi Ito ,
Darius A. Spieth  and
Naoya Takezawa
Takato Hiraki
Affiliation:
Kwansei Gakuin University, Institute of Business and Accounting, Nishinomiya-shi, Hyogo-ken 662-8501, Japan. thiraki@kwansei.ac.jp
Akitoshi Ito
Affiliation:
Hitotsubashi University, Graduate School of International Corporate Strategy, Chiyoda-ku, Tokyo 101-8439, Japan. aito@ics.hit-u.ac.jp
Darius A. Spieth
Affiliation:
Louisiana State University, School of Art, 123 Art Building, Baton Rouge, LA 70803. dspieth@lsu.edu
Naoya Takezawa
Affiliation:
Nanzan University, Graduate School of Business Administration, 18 Yamazato-cho, Showa-ku, Nagoya, 466-9673 Japan. ntakezaw@nanzan-u.ac.jp
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Abstract

We test the luxury consumption hypothesis of Ait-Sahalia, Parker, and Yogo (2004), using a unique international art price, import/export flow, and stock market data set. We find that the demand for art by Japanese collectors is positively correlated with art prices and Japanese stock prices. This correlation is magnified during the “bubble period” of the Japanese economy (the mid-1980s to the early 1990s) and gains even further strength for works of art typically favored by Japanese collectors. Our results suggest that Japanese investors (or Japanese asset markets) indeed affect international art prices—especially during the bubble period and its aftermath.

Type
Research Articles
Information
Journal of Financial and Quantitative Analysis , Volume 44 , Issue 6 , December 2009 , pp. 1489 - 1514
Copyright
Copyright © Michael G. Foster School of Business, University of Washington 2009

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