Macroeconomic Cycle Impact Analysis On The Art Market Prices

The development and prosperity of Chinese art market heavily relies on the rapidgrowth of economy in China, which has brought many opportunities and hugepotential to the operation and investment of the art market. The growth anddevelopment of the art market is an inevitable trend, but in order to achieve long-termdevelopment, it must have reasonable price. However, the market price of the art hasbeen a big problem in the development of the art market. Theoretically, the art marketis similar to the land market, whose supply remains relatively stable, while thedemand is affected by many factors. As the art market price is formed by auction, itwill go up when it is demanded by more than one person at the same time. As a result,in the supply and demand theory, the fundamental reason that the art market price hasa rapid rise is because of the strong demand for the artwork. However, the demand ofthe art market is affected by the prices of artwork themselves, the relevant commodityprices, personal income and the expected effect, but the changes of these factors areinseparable from the changes of the macro economic cycle.This paper is based on the theory of macro-economic cycle by reviewingreferences related to micro-economic cycle and art market. The definition of artworkand its current research situation are expounded detailedly, and the ups and downs ofart market price caused by the four phases changes of micro-economic cycle are alsodescribed and analyzed intuitively by analyzing relevant micro-economic factors,which laid a theoretical foundation for the later empirical analysis. These factorsmainly include the per capita GDP, money supply, inflation rate, and exchange rateand interest rate, and the first three factors are analyzed particularly. Then, therelationship between the macroeconomic factors and the art market price isinvestigated by analyzing data from2000to2013, combined with multivariate linearregression model, cointegration test, Granger causality test in Eviews. We learnedthat a single micro-economic factor is significantly related to the fluctuation of artmarket price, especially for the per capital GDP, money supply and inflation rate.Furthermore, when micro-economic factors work together with the art market, the effect of per capital GDP is not significant for the market of traditional Chinesepainting, mainly affected by money supply, interest rate and inflation rate with afunction coefficient of0.69,0.85and8.01, respectively. For the oil painting market,the per capita GDP, money supply, interest rate and exchange rate all have significanteffect and the elastic coefficients are3.38,6.84,1.82and5.58, respectively. Inaddition, Granger causality test result shows that the per capita GDP and the moneysupply have a close link to the art market price.By using theoretical analysis and empirical analysis, the results indicate that theeffects of macro-economic cycle on the art market price changes are includedlong-term and short-term behaviors. In the long run, the effects of economic factorson the art market price are obvious, especially the money supply, per capita GDP andinflation rate. But in the short term, the effect of previous art market prices is muchhigher than economic factors. The reasons can be explained that in the short term, theprice fluctuation in the art market are affected by adaptive expectations, tax rate, hotmoney and so on. However, in the long run, on the premise of information symmetry,consumers can make the most of the existing data related to economic factors andcarry on rational expectations, relieving the problem of information asymmetry of artmarket price effectively. Therefore, the art market prices can be consistent with theiractual values and realize the orderly development of the art market.