The Greek Tragedy. Narratives and Fictional Expectations in the Greek Sovereign Debt Crisis

• In Event: 3541 - The Economic Sociology of Knowledge and Expertise

Abstract

Between 2009 and 2015 Greece underwent a profound sovereign debt crisis that led to a serious political crisis in Europe and the restructuring of Greek debt. What explains financial investors’ perception of the risks associated with Greek sovereign bonds? Taking up the concept of “fictional expectations” (Beckert 2016), we argue that dominating narratives contributed to the changes in spreads of Greek bonds during the crisis. Based on the text mining of more than 13, 000 articles from the Financial Times and the Wall Street Journal, we show the changes in dominance of certain topics and shifting sentiments expressed in the expert discourse. In a time series regression analysis we then show the effects of this discourse on spread development.

Authors

• Jens Beckert, Max Planck Institute for the Study of Societies

• Lukas Arndt, Max Planck Institute for the Study of Societies