Search results

The financial underperformance of art as an investment is well documented. In contrast to studies conducted on peace-time periods, this paper shows that the art market in occupied France during WWII significantly outperformed all alternative investments (bonds, equities, as well as currencies exchanged on the black market) other than gold. This suggests that art may be a good hedge against low-probability disasters. The paper further demonstrates that motives to purchase art (consumption and investment) vary over time. In his theoretical model, Mandel (2009) attributes art's low return to the utility derived from conspicuous consumption. In occupied France during WWII, conspicuous consumption was impossible for artworks deemed "degenerate" by the Nazis. The price evolution of "degenerate" versus "non-degenerate" artworks confirms the importance of conspicuous consumption in artworks' pricing. Eventually, the paper defines the concept of discretion, the ability to store a large amount of value in small and easily transportable goods. During wartime, illegal activities and the risk of being forced to flee the country increased the interest for discreet assets as shown by the better performance of small (and thus discreet) artworks in comparison to large ones. ; info:eu-repo/semantics/published

This paper analyzes, on basis of an original database of close to 3 000 canvasses sold during the war in Drouot, the main French auction house, the evolution of the art market in occupied France. Based on hedonic regressions, it shows that by all standards the market experienced a massive boom. Our index increases from a value of 100 in December 1940 to more than 500 in February 1943 after which a marked decline occurred up till November 1943. The paper also analyzes the impact on the market of a given state policy regarding acceptable taste. The paper shows that the price of the paintings viewed as "degenerate" by the Nazis mimicked those of the art market in general and this up till June 1944 when their price increases once more whereas the general index decreases slightly. ; info:eu-repo/semantics/published

Although studies of the Paris stock exchange are quite numerous, its functioning during the Second World War has been overlooked. Based on archives from both the French brokers (Compagnie des Agents de Change) and from the occupying forces, this paper describes the market microstructure, the changes in market organization and the manipulations of the stock prices by the Nazis. Furthermore, the paper shows that, for economic reasons, some measures imposed by the Nazis were kept after the war. It suggests, moreover, that long-term analysis based on indices that include the war years could be misleading because most stocks could not be bought or sold, even though they were quoted at the time. ; info:eu-repo/semantics/published

In 1918, the Soviet revolutionary government repudiated the Tsarist regime's sovereign debt, triggering one of the biggest sovereign defaults ever. Yet the price of Russian bonds remained high for years. Combing French archival records, Kim Oosterlinck shows that, far from irrational, investors had legitimate reasons to hope for repayment. Soviet debt recognition, a change in government, a bailout by the French government, or French banks, or a seceding country would have guaranteed at least a partial reimbursement. As Greece and other European countries raise the possibility of sovereign default, Oosterlinck's superbly researched study is more urgent than ever

In 1918, the Soviet revolutionary government repudiated the Tsarist regime sovereign debt, triggering one of the biggest sovereign defaults ever. Yet the price of Russian bonds remained high for years. Combing French archival records, Kim Oosterlinck shows that, far from irrational, investors had legitimate reasons to hope for repayment. Soviet debt recognition, a change in government, a bailout by the French government, or French banks, or a seceding country would have guaranteed at least a partial reimbursement. As Greece and other European countries raise the possibility of sovereign default, Oosterlinck superbly researched study is more urgent than ever.

Abstract
This paper investigates quantitatively the evolution of the German art market between 1937 and 1944. During the war, the boom observed in occupied countries offers a sharp contrast with the price evolution in the United Kingdom. Did the German art market show more similarities with the countries it was occupying or was its evolution closer to the British one? Our results show that the German art market underwent a boom during the war. Beyond the historical interest in the art market, this analysis also speaks to the larger debates on wartime economies and of artworks as wartime investments.

Economists have suggested it was optimal to signal the odious character of bonds when they were issued. However, since the odious debt doctrine has not been recognized by any court, one could argue that denouncing odious debts is useless. Exploiting a unique historical episode, this paper quantifies the impact of protests on odious debts. In 1906, the Russian government floated a bond in Paris to cover the costs of its war against Japan but also to raise money to crush the political movements wishing to reform Russia's political system. Issued without parliamentary consent, this loan met with fierce opposition. Press campaigns in Great Britain, France and Germany denounced its odious character. If failure or success is determined solely by the ability to prevent a loan from being issued, then the campaign failed. We argue, however, that failure or success should be determined in light of the financial costs imposed on the issuer for future loans and even the ability to force a postponement of these loans. We show that these campaigns increased the yields of all Russian bonds traded in Paris, and thus Russia's future borrowing cost. Yields on the 1906 loan, which was specially targeted by the campaigns, rose even more. However, once the press campaigns stopped, yields experienced a declining trend, highlighting the important role the press may have on odious debts. ; SCOPUS: ar.j ; info:eu-repo/semantics/published

"Sovereign" bonds issued by colonies are often supposed to benefit from an implicit imperial guarantee. This guarantee is usually presented as the main reason why yields on colonial bonds are exceptionally low. This paper investigates investors' perception of this guarantee during the interwar period, a period during which some guarantors faced financial turmoil and some colonies began their journey towards independence. On the basis of an original database tracking the yields of six colonial bonds we show that, in general, market participants believed the guarantee would be honored. This general observation needs however to be nuanced. In 1931 when Britain left the gold standard, investors felt the British guarantee was less valuable. Furthermore when colonies were facing extreme financial distress markets reassessed the likelihood the guarantee would be honored. This was also the case when it became clear that India would become independent. ; info:eu-repo/semantics/published