TY  - JOUR
AU  - Rose,Andrew K.
AU  - Spiegel,Mark M.
TI  - The Olympic Effect
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14854
PY  - 2009
Y2  - April 2009
UR  - http://www.nber.org/papers/w14854
L1  - http://www.nber.org/papers/w14854.pdf
N1  - Author contact info:
Andrew K. Rose
Haas School of Business Administration
University of California, Berkeley
Berkeley, CA 94720-1900
Tel: 510/642-6609
Fax: 510/642-4700
E-Mail: arose@haas.berkeley.edu

Mark M. Spiegel
Federal Reserve Bank of San Francisco
101 Market Street
San Francisco, CA 94105
E-Mail: mark.spiegel@sf.frb.org
AB  - Economists are skeptical about the economic benefits of hosting "mega-events" such as the Olympic Games or the World Cup, since such activities have considerable cost and seem to yield few tangible benefits. These doubts are rarely shared by policy-makers and the population, who are typically quite enthusiastic about such spectacles. In this paper, we reconcile these positions by examining the economic impact of hosting mega-events like the Olympics; we focus on trade. Using a variety of trade models, we show that hosting a mega-event like the Olympics has a positive impact on national exports. This effect is statistically robust, permanent, and large; trade is around 30% higher for countries that have hosted the Olympics. Interestingly however, we also find that unsuccessful bids to host the Olympics have a similar positive impact on exports. We conclude that the Olympic effect on trade is attributable to the signal a country sends when bidding to host the games, rather than the act of actually holding a mega-event. We develop a political economy model that formalizes this idea, and derives the conditions under which a signal like this is used by countries wishing to liberalize.
ER  -