The Causal Economic Effects of Olympic Games on Host Regions

Abstract

This paper studies the effects of hosting Olympic Games on the regional economy in the short-and long-run. For identification, runners-up in the Olympic bidding process are used to construct the counterfactual for Olympic host regions. In the short-run, hosting Summer Olympics boosts regional GDP per capita by about 3 to 4 percentage points relative to the national level in the year of the event and the year before. There is also evidence for positive long-run effects, but results on the latter are not statistically robust. In contrast, Winter Olympics do not have a positive impact on host regions. If anything, they lead to a temporal decline in regional GDP per capita in the years around the event.

Short-term hotel room price effects of sporting events

“…The literature focuses almost exclusively on short- and long-term impacts of sporting events on tourist demand (e.g. Brännäs and Nordström, 2006; Fourie and Santana-Gallego, 2011; Kang and Perdue, 1994; Vierhaus, 2019); impacts on aggregate outcome variables, such as gross domestic product per capita and population (Billings and Holladay, 2012; Brückner and Pappa, 2015; Firgo, 2019; Nitsch and Wendland, 2017); or economic impacts on related industries such as accommodation, restaurants, retail and entertainment (Daniels and Norman, 2003; Daniels et al, 2004). Studies focusing on the impact of small-scale events typically estimate the additional revenues to the city generated by the events using stand-alone surveys (Ryan, 1998; Ryan and Lockyer, 2001).…”

“…The DID method is the standard method for analysing the economic impact of major sporting events such as the Olympic Games. Examples of analyses of the economic impact of the Olympic Games are Brückner and Pappa (2015) and Firgo (2019), for both the summer and winter Olympic Games, as well as Nitsch and Wendland (2017) and Billings and Holladay (2012) for the summer Olympic Games. Maennig and Richter (2012) and Vierhaus (2019) employ the propensity score matching analysis that models the likelihood of cities to host the Olympic.…”