Increasing number of world’s wealthy people leads to flourishing trend of luxuries demand worldwide, thus emphasizing the importance of luxuries in global economic market. Meanwhile, each individual’s wealth is reflected in country’s wealth, which is measured by GDP. Unfortunately, there has been limited research on luxuries and their relationship with GDP. In this research, causal relationship between luxuries and GDP of G7 and BRIC countries is investigated using Granger causality test. The AGI, Liv-ex 50, and K500 indexes are chosen as proxies for the top 3 performing luxuries during 2006-2016, i.e. art, wine, and classic cars.
Results show that causal relationship between each index and GDP indeed exists. The AGI has causal relationships with GDP of G7 and BRIC countries. Similarly, causal relationship between Liv-ex 50 and GDP is found in Canada, Germany, France, Italy, India, and China. The K500 index is proven to have causal relationship with GDP of US, Canada, Russia, India, and China. Those results also suggest that those indexes may be included to forecast GDP in certain countries, i.e. AGI to forecast GDP of US, Canada, Japan, Russia, and China; Liv-ex 50 index to forecast GDP of Canada, Germany, Italy, and India; K500 index to forecast GDP of US, Canada, Russia, and India.

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