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News Shocks in the Data: Olympic Games and Their Macroeconomic Effects

Markus Brückner () and Evi Pappa ()

Journal of Money, Credit and Banking, 2015, vol. 47, issue 7, 1339-1367

Abstract: We examine the macroeconomic effects of bidding for the Olympic Games using panel data for 188 countries during the period 1950–2009. Our findings confirm that economies react to news shocks: investment, consumption, and output significantly increase 9 to 7 years before the actual event in bidding countries. Hosting countries also experience significant increases in investment, consumption, and output 5 to 2 years before the hosting of the Games. Mapping the Olympics into a macroeconomic model, we show that we can match our empirical findings if we assume that an Olympic bid represents news about increases in government investment.

Date: 2015
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