The Animal Spirits of Sport Events: the Effect of the UEFA European Championships on GDP and Economic Confidence

Figure 2 shows the estimated coefficients of the baseline model. The first regression involving every edition of the UEFA European Championship is depicted in the graph above, the second one considering only the editions held after the third quarter of 1989 is graphed in the bottom half. The magnitude and significance level of such estimates are reported in the appendix, see Table A1 for the "all competitions" case and Table A2 for the "EURO92 onward" case. Remarkably, the negative and statistically significant coefficients for the one-lag logged GDP of the two estimations provide support to the convergence theory, according to which richer nations grows slower than poorer ones (Barro, 1991, 2015; Islam, 1995; Kremer et al., 2021; Mankiw et al., 1992).
As expected from the theoretical analysis, Figure 2 shows that winning the competition is not affected by any anticipation effect while hosting does. In particular, the hosting effect seems to be anticipated between the fifth and the second quarter before the beginning of the event, with one quarter being statistically significant in the "all competitions" case and another in the "EURO92 onward" one (Tables A1 and A2). Figure 2 also shows the possible presence of the "winner’s curse" proposed by Forbes and of a "host’s curse". Indeed, the winner seems to enjoy an initial boost in GDP growth followed by two quarters of contraction, while the host suffers slower growth from the quarter in which the tournament begins to the two quarters after. If coupled with the anticipation effects highlighted by the Figure, this means that the host country might experience faster growth before the championship thanks to the advertising and investments of the event (for example, due to the required investments in infrastructures) just to fall short of the expense recovery.

No significant effect is registered in the "all competition" analysis (Table A1). Nonetheless, as hypothesized earlier in this paper, the editions held after 1990 had a significant impact on both the winning and the hosting countries of the tournament. Interestingly, these effects are all negative (Table A2). In particular, winning the European Championship slowers growth by approximately 0.89% in the second quarter after the final after an initial boost by 4.8% and a subsequent slowdown by 0.45%. Similarly, the host experiences a statistically significant slowdown in the first and second quarter past the end of the tournament (−0.86% and −0.75%, respectively) after two quarters of (statistically insignificant) slower growth.
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