Economics of the Olympics

Many people around the world are jumping for joy at the proceedings of the 30th Olympiad, and for good reason! This marks the first time in Olympic history that every country participating has sent at least one female representative, as well as the first time that females outnumber the male participates for the USA (LA TIMES). These countries include Brunei, Qatar, and Saudi Arabia. In my mind, it's still interesting that Qatar bid for the 2016 Olympics considering that women would need to compete and the country is only just now sending female participants.

But I digress. If you're interested in seeing the effects of the Olympics on countries' GDP, most would be surprised to find that it either has no effect or negative effects. Why you ask? Well, government spending increases substantially prior to the actual games with the building of stadiums, road improvements, and even security. However, once the games are over, the government cuts back substantially. This shock sometimes sends countries into a frenzy. For an interesting look at the "Post Olympic Effect," check out this piece by the Federal Reserve Bank of San Francisco (PDF). Oh, and Go Team USA!