Economics of Olympics
ECON1001D – Macroeconomics
Yurii Hrabovetsky
2015-12-11
Jason Dean

The economics of the Olympics revolve around the prospect of high economic growth within the country post-Olympic years. This is often found to be an utter lie. The majority of the time the host country is promised a great amount of profit but the truth is that they tend to lose a lot of money on it – most of which comes from tax revenues. “During the competition between communities for the right to host a future Olympic Games, politicians and proponents bring forth predictions touting the economic benefits to the region that ultimately wins the right to host the Games” (Philip Porter, 2008, Page 470). Many politicians believe this idea of the economic value of the Olympics. Most of the time it is found that these countries lose a majority of the money. “However, when the Games are over the host communities are often left with substantial debts and, as we demonstrate below, little or no noticeable benefits” (Porter, 2008, Page 470). The predictions that are made and the results of the Olympics are often found to be completely different. This mostly due to the use of the input-output models and the misinterpretation of the short term results without consideration for the long term effects. This report will focus on how the predictions are made, the issues with these predictions, and the effects after the Olympics have ended. One of the models used to predict the results of the Olympics in a nation is the input-output model (I-O). “Although the demand for regional products used for the event or by its patrons is easy to estimate and the I-O model can quickly produce a host of predictions (often mistakenly called measurements) about the impact of demand changes on the regional economy, it appears that the model’s users fail to understand the nature of the