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

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  • Samuel Brazys

    (School of Politics and International Relations, University College Dublin)

  • Niamh Hardiman

    (School of Politics and International Relations, University College Dublin, UCD Geary Institute)

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.

Suggested Citation

  • Samuel Brazys & Niamh Hardiman, 2013. "From Tiger to PIIGS: Ireland and the use of heuristics in comparative political economy," Working Papers 201316, Geary Institute, University College Dublin.
  • Handle: RePEc:ucd:wpaper:201316
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    References listed on IDEAS

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    Cited by:

    1. Marcell Zoltán Végh, 2014. "Has Austerity Succeeded in Ameliorating the Economic Climate? The Cases of Ireland, Cyprus and Greece," Social Sciences, MDPI, vol. 3(2), pages 1-20, June.
    2. Samuel Brazys & Aidan Regan, 2016. "These Little PIIGS Went to Market: Enterprise Policy and Divergent Recovery in European Periphery," Working Papers 201517, Geary Institute, University College Dublin.
    3. Niamh Hardiman & Saliha Metinsoy, 2017. "How do ideas shape national preferences? The Financial Transaction Tax in Ireland," Working Papers 201710, Geary Institute, University College Dublin.

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    More about this item

    Keywords

    PIIGS; interest rates; ratings agencies; media; financial crisis;
    All these keywords.

    JEL classification:

    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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