The inpact of the economic crisis on Christie's Amsterdam

Abstract On the same day in September 2008, when the British artist Damien Hirst smashed art auction records by selling works for 168 million dollar, the bank Lehman Brothers filed for bankruptcy protection. It seemed that the art market slightly escaped the economic crisis. The last few years, many investors in the art market remain optimistic about the financial stability of art due to the crisis in the financial markets. Unfortunately, disappointing sales at the major auction houses Christie’s and Sotheby’s have proven that the art market has no such thing as immunity for the economic recession. Is the art market just experiencing a temporary correction or is it facing another art market crash? Will there be a new bubble in the art market, and ‐ not unimportant ‐ is this bubble set to burst this year? In this thesis I will try to examine the answer to these questions. Taking a closer look at art as investment, we look particularly at how auction markets do perform during bear markets. The main focus of the thesis is the theoretical and empirical relationship between the economy and the art market, more specific, art market activities like art auctions. The strategy used in this thesis is to gather information from the established literature to find some claims on art investment and with the help of quantitative data we test them empirically on the auction market of Christie’s. We use art auction results to evaluate the development of the auction market and to look for similarities between auction performances and economic movements during the period 1988–2008.