For years economists have been debating whether the organisation of the modern Olympic Games is a matter of honour or a matter of money, with no clear answer. Indeed, the debate may well be as old as the Olympics itself.1
The economic benefits of hosting the Games are dubious for most academics who have conducted independent research on the issue (see for example Owen 2005).
Only recently, Rose and Spiegel (2011), using a variety of trade models, show that hosting the Olympics has a positive impact on national exports which is statistically robust, permanent, and large.
These authors find that unsuccessful bids to host the Olympics have a similar positive impact on exports and explain their finding by arguing that what matters is the signal countries send to international markets when these countries bid for the Olympics. However, as the authors also recognise, their explanation cannot fit all aspects of the data. For instance, they cannot explain why open economies should bid to host the Olympics, and why countries bid repeatedly for the organisation of such events.