To Host or Not to Host? A Comparison Study on the Long-Run Impact of the Olympic Games

Macroeconomic research on sporting mega-events, like the Olympic Games, often focuses on the short-run economic impact of individual countries. In this paper, I explore the long-run effect of the Olympics on host countries, in general. I analyze hosts in relation to "runner-up" countries, i.e. countries that come in second to the hosts in the bidding process. Upon rectifying anomalies in the data set and including control variables for the initial state of the economy and population, I find that hosts' long-run GDP per capita (GDPpc) is negative in comparison to runner-up countries' at a statistically significant level. This suggests that a one-time spike in government expenditure may lead to long-run detrimental effects: a "reverse multiplier effect" perpetuates the fall in investment demand and consumption levels back to pre-Olympic levels. My results extend the view that individual countries experience a negative economic impact, to the group of host countries in general.