Giselle Datz

Virginia Tech, School of Public and International Affairs, Faculty Member

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Associate Professor and Chair, Government and International Affairs, School of Public and International Affairs, Virginia Tech.
Address: Alexandria, Virginia, United States

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Papers by Giselle Datz

What life after default? Time horizons and the outcome of the Argentine debt restructuring deal

Review of International Political Economy, Sep 10, 2009

Sovereign Debt Default

Oxford University Press eBooks, Dec 22, 2017

Governments as Market Players: State Innovation in the Global Economy

Journal of International Affairs, Sep 22, 2008

Brazil's Pension Fund Developmentalism

Competition and Change, May 1, 2013

Adaptable Agendas: Private Creditors and the Politics of Debt in Emerging Markets

Palgrave Macmillan UK eBooks, 2008

Financial crises in the 1990s and early 2000s exposed the vulnerabilities of emerging economies i... more Financial crises in the 1990s and early 2000s exposed the vulnerabilities of emerging economies in an age of financial liberalization. From Mexico to Russia to Argentina, contagion effects were directly felt or, as in the case of the latter, the series of external shocks that marked the 1990s decade ended up amounting to monetary and fiscal pressures that kept feeding one another in an unsustainable pattern. Indeed, the Argentine crisis that escalated in 2001 led to the largest default on sovereign debt to date. Four years later, the debt restructuring process entailed a larger reduction in repayment than any other process of its kind since the 1980s.

Brazil and the Israeli—Palestinian Conflict in the New Century: Between Ambition, Idealism, and Pragmatism

Israel Journal of Foreign Affairs, 2013

Varieties of Power in Latin American Pension Finance: Pension Fund Capitalism, Developmentalism and Statism

Government and Opposition, May 22, 2014

The Narrative of Complexity in the Crisis of Finance: Epistemological Challenge and Macroprudential Policy Response

New Political Economy, Aug 1, 2013

Deviant Debt: Reputation, Litigation, and Outlier Effects in Argentina's Debt Restructuring Saga

New Political Economy, Apr 11, 2019

The literature on sovereign debt restructurings has not yet fully accounted for the fact that tod... more The literature on sovereign debt restructurings has not yet fully accounted for the fact that today these deals are mostly about the contractual terms and judicial decision-marking that shape disputes in foreign courts. The heavily theorised concepts of reputation and sovereign immunity can, at best, only partly explain the specific dynamics at play. Here, we present the limitations of the two concepts through an analysis of the protracted US court battle between Argentina and some of its holdout creditors. The December 2011 NY district court decision in favour of these creditors reversed a long record of unenforceability for creditors' demands in foreign litigation. The paper argues that the inability of sovereigns to issue debt abroad due to ongoing international litigation, rather than the more rhetorical reputational punishments, makes default costly and its outcome less predictable. This is possible because governments often waive sovereign immunity from suit, particularly in the Unites States. Since the Argentine case has spurred preemptive reactions by other sovereigns in the form of contractual changes, the deviant case is also a 'trend-setter', informally institutionalising a new international 'contractual normal'.

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Global–National Interactions and Sovereign Debt Restructuring Outcomes

Routledge, Oct 31, 2013

Reframing development and accountability: the influence of sovereign credit ratings on policy making in developing countries

Third World Quarterly, 2004

ABSTRACT At a time of increased financial volatility, understanding &#39;development&#39;... more ABSTRACT At a time of increased financial volatility, understanding &#39;development&#39; requires that we trace spheres of accountability in order to detect the consequences of shifts in power structures from the public to the private sectors, especially. By focusing on the business of sovereign credit ratings, I argue that ratings have been particularly influential in this context not only because of their function as a benchmark for private investment, but because they now also enter into the calculations of policy makers in developing countries who are increasingly compelled to implement policies that reduce their countries&#39; sovereign risk at possibly high costs for sustained economic growth. I explain that governments&#39; eagerness to signal their potential as reliable capital recipients allows for credit ratings to become a powerful site of governance. This outcome is not justified by the quality of rating agencies&#39; output, but by the subjective power of the notion of risk in a crisis prone environment that shifts accountability--through this disproportional influence of credit rating agencies--from the public to the private realm. The Argentine crisis of 2001 is presented here as a case study that illustrates these dynamics.

The politics of pension reform reversal: a comparative analysis of Hungary and Argentina

East European Politics, 2013

ABSTRACT Argentina and Hungary have recently reversed the pension reforms of the 1990s that had i... more ABSTRACT Argentina and Hungary have recently reversed the pension reforms of the 1990s that had instituted a mandatory private pillar and transferred savings under management by private pension funds back to the public sector. It is argued here that these latest reforms were a product of political dynamics that allowed the governments of Cristina Kirchner in Argentina and Viktor Orban in Hungary to enjoy legislative support and no significant popular backlash as the incumbents blamed the capitalisation system for failures in coverage, poor performance, and high administrative costs. Yet institutional considerations alone do not explain the type of pension reform enacted nor its timing. The need felt to finance short-term debt obligations and promote deficit reduction in a context of significantly restricted access to international credit was crucial in both countries. The two cases reveal that despite being the quintessential intertemporal political bargain, pension reform can be paradoxically determined by short-term fiscal considerations. The reversal of reforms originally aimed at relieving long-term budgetary pressures fuels concerns about the sustainability of the public pension system in indebted economies once again.

Varieties of Power in Latin American Pension Finance: Pension Fund Capitalism, Developmentalism and Statism

Government and Opposition, 2014

When it comes to analyses of financial power in Latin America, there has been a tendency to assum... more When it comes to analyses of financial power in Latin America, there has been a tendency to assume it is mostly external, relatively homogeneous, and usually constraining of domestic policy autonomy. Increasingly, however, when speaking of financial power in the region, a focus exclusively on foreign capital misses a significant part of the empirical landscape, one inhabited by large domestic institutional investors: public and private pension funds. A focus on these funds reveals that a neat state–finance dichotomy is often unrepresentative of the type of blurred web of interests, influence and ownership that characterizes even those economies that have embraced a significant degree of liberalization. In fact, pension finance is far from uniform across countries. In order to capture this diversity in Latin America, a new typology is suggested that departs from the Anglo-American notion of ‘pension fund capitalism’ and further specifies pension finance as also revealing dynamics bes...

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The Inextricable Link Between Sovereign Debt and Pensions in Argentina, 1993-2010

Latin American Politics and Society, 2012

Established with the reform of 1993, Argentina’s private pension funds became crucial sources of ... more Established with the reform of 1993, Argentina’s private pension funds became crucial sources of credit for the national government. They purchased large amounts of sovereign bonds defaulted on in 2001 and hence were key to the success of the debt restructuring of 2005. The private pillar was always vulnerable to political maneuvering; the nationalization of private pension funds in 2008 was only the last stage in an iterated process of state intervention, a function of public debt dynamics. This article argues that the financial pressures associated with Argentina’s sovereign debt burden systematically shortened the temporality of pension policy decisions, taking those away from long-term concerns about the stability of the social security system and toward the immediacy of debt-financing imperatives. Therefore, the politics of pension reform reversal in Argentina were determined by the increasingly strong and inextricable link between debt and pensions.

Brazil's Pension Fund Developmentalism

Competition & Change, 2013

Lula's government in Brazil fostered an engagement with local pension funds that have become ... more Lula's government in Brazil fostered an engagement with local pension funds that have become key state levers for long-term investment, particularly in large and politically salient infrastructure projects. This process, here called pension fund developmentalism, describes more than specific investment choices; it grounds Brazil's current growth strategy on relationships between the government and a particular set of prominent players, shedding light on the state's more forceful re-engagement as a promoter of development at a time when aspirations for global economic integration have been matched by the commitment to growth through the expansion of local sources of funding.

Deviant Debt: Reputation, Litigation, and Outlier Effects in Argentina's Debt Restructuring Saga

New Political Economy, 2019

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Financial Globalization and Domestic Policy Autonomy in Latin America

Oxford Research Encyclopedia of Politics, 2019

Despite theoretical assumptions about the potential for financial liberalization in Latin America... more Despite theoretical assumptions about the potential for financial liberalization in Latin America to foster economic growth, empirical developments revealed a different story. With financial liberalization came greater macroeconomic instability, exposing countries to financial crises even when domestic economic fundamentals were mostly in order. At the policy front, capital account liberalization posed crucial challenges to macroeconomic governance. Indeed, international political economy literature on financial globalization has highlighted that developing countries’ governments who chose to implement policies that contradicted financial markets’ expectations could be “disciplined” or “punished” by the threat of capital outflows. Yet, capital flows to emerging economies are not determined solely by domestic (push) factors. Even in the most extreme case of noncompliance with investors’ (creditors’) preferences—i.e., sovereign default—evidence shows that market re-access and the cost...

Ties that bind and blur: financialization and the evolution of sovereign debt as private contract

Review of Evolutionary Political Economy, 2021

The rich scholarship on the politics and finance of sovereign debt tends to take for granted debt... more The rich scholarship on the politics and finance of sovereign debt tends to take for granted debt's most basic form: as a private contract. Nevertheless, legal challenges have been central to the contemporary evolution of sovereign debt dynamics thanks to litigating strategies rendered possible by-mostly standard-contractual stipulations in international sovereign bonds. By using a debt-as-private-contract lens, the paper highlights how exposed sovereign debtors present themselves to these global transactions, how foreign sovereign bond contracts anchor otherwise footloose finance in particular jurisdictions, and how contractual changes sparked by outlier cases of protracted litigation or recent turbulence in debt exchanges have been key to global efforts to reform debt governance around market-based parameters. The legal battle between Argentina and its holdout creditors in US courts is analyzed here to illustrate these dynamics given its significance in sparking contractual revisions. Ultimately, it is clear that credit and contract are inextricably linked. Contractual evolution is revealing of the legal risks taken on by sovereign debtors and their creditors in private markets. The cost of debt hence may go beyond relatively predictable financial calculations.

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Big Fish in Small Ponds: Pensions and Capital Market Development in Latin America

Governments as Market Players: State Innovation in the Global Economy

Journal of International Affairs, 2008

Financial innovation emanating from the public sector is not a new phenomenon. The literature and... more Financial innovation emanating from the public sector is not a new phenomenon. The literature and practice of financial regulation is filled with instances in which the public sector understood and tried to contain financial excesses and attempted to maximize opportunities for economic growth via private investment. Hardly studied, however, have been cases of financial innovation that are not primarily related to regulation of private or public financial flows. This paper focuses on how governments in emerging markets are acting increasingly as financial market players, enacting strategies that are not simply those of a risk-averse welfare maximizer (in a formal modeling description), but that of a high(er) yield seeking investor. The public realm in which states operate is symbiotic. It encompasses two dualities: one between public and private activity and authority, and the other between demand and supply for financial innovation. In continuing with its transformative process, the...

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What life after default? Time horizons and the outcome of the Argentine debt restructuring deal

Review of International Political Economy, Sep 10, 2009

Sovereign Debt Default

Oxford University Press eBooks, Dec 22, 2017

Governments as Market Players: State Innovation in the Global Economy

Journal of International Affairs, Sep 22, 2008

Brazil's Pension Fund Developmentalism

Competition and Change, May 1, 2013

Adaptable Agendas: Private Creditors and the Politics of Debt in Emerging Markets

Palgrave Macmillan UK eBooks, 2008

Brazil and the Israeli—Palestinian Conflict in the New Century: Between Ambition, Idealism, and Pragmatism

Israel Journal of Foreign Affairs, 2013

Varieties of Power in Latin American Pension Finance: Pension Fund Capitalism, Developmentalism and Statism

Government and Opposition, May 22, 2014

The Narrative of Complexity in the Crisis of Finance: Epistemological Challenge and Macroprudential Policy Response

New Political Economy, Aug 1, 2013

Deviant Debt: Reputation, Litigation, and Outlier Effects in Argentina's Debt Restructuring Saga

New Political Economy, Apr 11, 2019

Download

Global–National Interactions and Sovereign Debt Restructuring Outcomes

Routledge, Oct 31, 2013

Reframing development and accountability: the influence of sovereign credit ratings on policy making in developing countries

Third World Quarterly, 2004

The politics of pension reform reversal: a comparative analysis of Hungary and Argentina

East European Politics, 2013

Varieties of Power in Latin American Pension Finance: Pension Fund Capitalism, Developmentalism and Statism

Government and Opposition, 2014

Download

The Inextricable Link Between Sovereign Debt and Pensions in Argentina, 1993-2010

Latin American Politics and Society, 2012

Brazil's Pension Fund Developmentalism

Competition & Change, 2013

Deviant Debt: Reputation, Litigation, and Outlier Effects in Argentina's Debt Restructuring Saga

New Political Economy, 2019

Download

Financial Globalization and Domestic Policy Autonomy in Latin America

Oxford Research Encyclopedia of Politics, 2019

Ties that bind and blur: financialization and the evolution of sovereign debt as private contract

Review of Evolutionary Political Economy, 2021

Download

Big Fish in Small Ponds: Pensions and Capital Market Development in Latin America

Governments as Market Players: State Innovation in the Global Economy

Journal of International Affairs, 2008

Download

Unconventional Monetary Policy, Debt Management and Pensions: Co-Dependent Dynamics in the UK 1

Commonly the "pensions burden" is associated with rises in government debt in discussions about f... more Commonly the "pensions burden" is associated with rises in government debt in discussions about fiscal policy. Yet often neglected are the monetary policy dynamics that also underpin the debt-pensions nexus. In particular, a timely debate has emerged on how unconventional monetary policy (i.e., large bond purchases by central banks, known as quantitative easing) affect pension funds' performance. Because these funds invest heavily in government bonds, the lower yields associated with QE increase the value of the funds' liabilities and hence their deficits with a potentially negative impact on corporate dividends and stock valuations. The paper identifies and explains the connections between debt issuance and pension investments in the UK, tracking the debate on QE's impact on British pension schemes. It is argued that the mutual dependence between the government's long-term financing needs and pension funds' investment strategies is becoming more complex and politicized as a product of regulatory guidelines, government intervention in bond markets, and renewed concerns over pension funds' overreliance on government bonds as key to their investment strategies. It is hence imperative not only to better understand the interplay of monetary policy with other policies, but also to reconcile the growing financing needs of indebted nations with those of an increasingly vulnerable domestic private pension sector.

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Institutionalizing the Long-Term in Latin American Finance? The Role of Private Pensions in Mexico and Brazil

Much as research on the role of pension arrangements in advanced economies’ financial systems has... more Much as research on the role of pension arrangements in advanced economies’ financial systems has evolved, we still know little about the differentiated strategies of pension funds in emerging markets and the symbiotic interplay between their investment decisions and local financial development. Although the finance-pension nexus that shapes varieties of welfare capitalism in advanced economies (Estévez-Abe 2001) is not present in Latin America, given the weak connection between corporations and pension arrangements, growing pension savings do not exist in a financial vacuum. Here it is argued that they are part of a more contingent and eventful local financial landscape than usually depicted. Rather than a teleological outcome, complementarities between private pension funds and capital market development evolve slowly and are contingent on regulatory and conjunctural factors (primarily interest rates). These fundamentally determine how imperative portfolio diversification away from public bonds becomes and how attractive (or not) long-term investment allocations are for pension funds. A focus on pension funds’ diversification strategies in Brazil and Mexico paves the way to a more granular understanding of Latin America's varied financial markets, revealing unfolding innovation beneath a seemingly placid surface.

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Emerging Markets’ Central Banks: “New Normal” or Business as Usual?

by Maria Antonieta Del Tedesco Lins and Giselle Datz

Despite much discussion about a “new normal” for advanced economies’ central banks, less attentio... more Despite much discussion about a “new normal” for advanced economies’ central banks, less attention has been paid to how the 2008 crisis affected emerging markets’ central banks. Engaging with this question, the paper investigates the central banks in Brazil, Mexico and India. The three case studies reveal distinct institutional arrangements, monetary policy frameworks, and resilience to the 2008 crisis. In Brazil, "central bank autonomy", key to the 1990s macroeconomic reforms, has been challenged by recent exchange rate volatility and fiscal expansion. Current fiscal adjustment has reversed this path. In Mexico, institutionalized central bank independence has been linked to relative resilience to the 2008 crisis and the ability to weather volatility related to the Fed’s tapering of its quantitative easing program. In India, where gradualism prevails, inflation targeting was adopted in 2015, confirming continuity in central bank leadership and the traditionally cautious move towards the bank’s autonomy. We estimate each institution’s "credibility" through a combination of independent variables and qualitatively examine the banks’ narratives and strategies. It is argued that no “new normal” exists; far from a uniform picture shaped by international developments, central banks’ main challenges remain those related to contending with domestic political dynamics.

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