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News shocks in the data: Olympic Games and their macroeconomic effects – Reply

Author

Listed:
  • Viktoria C. E. Langer

    () (Chair for Economic Policy, University of Hamburg)

  • Wolfgang Maennig

    () (Chair for Economic Policy, University of Hamburg)

  • Felix J. Richter

    () (Chair for Economic Policy, University of Hamburg)

Abstract

Recent analyses relate increases in the growth rate of countries to anticipation effects caused by bidding for the Olympic Games, so called news shocks. We argue that these findings should be interpreted cautiously. First, these analyses may suffer from an omitted variable bias because they neglect key determinants of economic growth. Second, these analyses compare the bidders for the Olympic Games to all other countries in the world, which constitutes a comparison between groups that show large differences in their structural characteristics. We show that including established determinants of economic growth and comparing the bidders to a suitable control group may lead to a complete disappearance of the anticipated economic effects of Olympic Games.

Suggested Citation

  • Viktoria C. E. Langer & Wolfgang Maennig & Felix J. Richter, 2015. "News shocks in the data: Olympic Games and their macroeconomic effects – Reply," Working Papers 052, Chair for Economic Policy, University of Hamburg.
  • Handle: RePEc:hce:wpaper:052
    as

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    File URL: http://www.hced.uni-hamburg.de/WorkingPapers/HCED-052.pdf
    File Function: First Version, 2015
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    References listed on IDEAS

    as
    1. Stephanie Schmitt‐Grohé & Martín Uribe, 2012. "What's News in Business Cycles," Econometrica, Econometric Society, vol. 80(6), pages 2733-2764, November.
    2. Andrew K. Rose & Mark M. Spiegel, 2011. "The Olympic Effect," Economic Journal, Royal Economic Society, vol. 121(553), pages 652-677, June.
    3. Dennis Coates & Brad R. Humphreys, 2008. "Do Economists Reach a Conclusion on Subsidies for Sports Franchises, Stadiums, and Mega-Events?," Econ Journal Watch, Econ Journal Watch, vol. 5(3), pages 294-315, September.
    4. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 407-443.
    5. Wolfgang Maennig & Felix Richter, 2012. "Exports and Olympic Games," Journal of Sports Economics, , vol. 13(6), pages 635-641, December.
    6. Paul Beaudry & Franck Portier, 2006. "Stock Prices, News, and Economic Fluctuations," American Economic Review, American Economic Association, vol. 96(4), pages 1293-1307, September.
    7. Beaudry, Paul & Portier, Franck, 2004. "An exploration into Pigou's theory of cycles," Journal of Monetary Economics, Elsevier, vol. 51(6), pages 1183-1216, September.
    8. Robert J. Barro, 2003. "Determinants of Economic Growth in a Panel of Countries," Annals of Economics and Finance, Society for AEF, vol. 4(2), pages 231-274, November.
    9. Marco Caliendo & Sabine Kopeinig, 2008. "Some Practical Guidance For The Implementation Of Propensity Score Matching," Journal of Economic Surveys, Wiley Blackwell, vol. 22(1), pages 31-72, February.
    10. Markus Brückner & Evi Pappa, 2015. "News Shocks in the Data: Olympic Games and Their Macroeconomic Effects," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 47(7), pages 1339-1367, October.
    11. Schmitt-Grohé, Stephanie & Uribe, Martín, 2012. "What's News in Business Cycles," CEPR Discussion Papers 8984, C.E.P.R. Discussion Papers.
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    Citations

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    Cited by:

    1. Franziska K. Kruse & Wolfgang Maennig, 2017. "The future development of world records," Working Papers 061, Chair for Economic Policy, University of Hamburg.
    2. Robert A. Baade & Victor A. Matheson, 2016. "Going for the Gold: The Economics of the Olympics," Journal of Economic Perspectives, American Economic Association, vol. 30(2), pages 201-218, Spring.
    3. Franziska K. Kruse & Wolfgang Maennig, 2018. "Suspension by choice – determinants and asymmetries," Working Papers 064, Chair for Economic Policy, University of Hamburg.
    4. Gabriel M. Ahlfeldt & Wolfgang Maennig & Felix J. Richter, 2017. "Zoning in reunified Berlin," Working Papers 059, Chair for Economic Policy, University of Hamburg.
    5. Wolfgang Maennig, 2017. "Public Referenda and Public Opinion on Olympic Games," Working Papers 057, Chair for Economic Policy, University of Hamburg.
    6. Wolfgang Maennig, 2017. "Governance in Sports Organizations," Working Papers 060, Chair for Economic Policy, University of Hamburg.
    7. Wolfgang Maennig, 2017. "Major Sports Events: Economic Impact," Working Papers 058, Chair for Economic Policy, University of Hamburg.

    More about this item

    Keywords

    Anticipated shock; Olympic Games; GDP growth; matching; mega event;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • F1 - International Economics - - Trade
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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