From Tiger to PIIGS: Ireland and the use of heuristics in comparative political economy

Samuel Brazys and Niamh Hardiman
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Samuel Brazys: School of Politics and International Relations, University College Dublin

No 201316, Working Papers from Geary Institute, University College Dublin

Abstract: Acronyms for groups of countries provide an often useful shorthand to capture emergent similarities, and terms such as PIIGS, BRICs and LDCs pervade the lexicon of international and comparative political economy. But they can also lead to misleading narratives, since the grounds for use of these terms as heuristic devices are usually not well elaborated. This can become problematic when the use of such heuristics drives market responses in areas such as risk perception and changes in interest rates. In this paper we look at the narrative construction of the group of countries that has been grouped as ‘PIIGS’ (Portugal, Ireland, Italy, Greece, and Spain). We examine the process whereby the group came into being, trace how Ireland became a member of this grouping, and assess the merits of classifying these countries together. Our contention is that the repetition of the acronym in public debate shaped the behaviour of market actors toward these countries. We find evidence of Granger causality, such that increased media usage of the term ‘PIIGS’ is followed by converging interest rate correlations between Ireland and the other PIIGS, compared to the interest rate correlations between Ireland and the ‘northern’ Eurozone economies. We argue that this is a pointer toward the independent effect of perceptions and discourse over economic fundamentals. We conclude with more general thoughts and cautions on the use of heuristics in comparative political economy.

Keywords: PIIGS; interest rates; ratings agencies; media; financial crisis (search for similar items in EconPapers)
JEL-codes: B41 C20 E43 H63 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2013-10-01
New Economics Papers: this item is included in nep-eec
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Citations: View citations in EconPapers (4)

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