Who should own the past?

Abstract We examine restitution of cultural goods and its optimal form, that is, whether restitution should be definite or take the form of a loan. We show that a loan can be optimal when the source country is indispensable due to its cultural significance, while full restitution is optimal when the host country completes restoration. Relative valuations can drive restitution, but do not pin down its form. Finally, restitution is not always optimal despite the source country's higher valuation for the cultural good. We apply our analysis to the restitution of the Icelandic manuscripts and the proposed loan or restitution of the Benin Bronzes.