Academically he co-introduced Dark Matter,a term referring to 'invisible' assets that explain the difference between official estimates of the current account and estimates based on the actual return net financial position as well as the concept of de facto exchange rates. Throughout his academic career he has published close to fifty articles in refereed journals as well as eight books.
In 2007 when Mauricio Macri,the mayor of the city of Buenos Aires,asked him to act as president of the Bank of the City of Buenos Aires he returned to Argentina.[3] During his tenure,the bank made a big turnaround from losing 160million Argentine pesos annualized during the six months previous to his appointment to becoming the most profitable state-owned firm in the country six years later with record profits of more than 1300million Argentine pesos in 2013.[4] His management of the bank became a Harvard case study.[5]
In 2013,Federico Sturzenegger resigned as president of Banco Ciudad to become a Member of the Chamber of Deputies.
At the end of 2023,Federico Sturzenegger became major advisor to newly-elected president Javier Milei to deregulate Argentine's economy.[6]
Core inflation,in particular,by December 2017 had stabilized at an annualized value of 18%,with downward expectations. This disinflation process,in turn,occurred in a context of strong economic growth (the economy grew by in 2017). Even with these results in December 2017,the government decided to dismantle the system,which subsequently implied a process of increasing inflation,which motivated its departure shortly after.[10][11]
Spread Country Risk (EMBI+) for Argentina. The red line marks the 28D event.
To develop the financial system,he introduced the Purchasing Value Units (UVAS),deposits and credits that adjust for the price level,for the first time in decades,the development of long-term credit. The result was the highest credit growth in 20 years in 2017,with a real explosion in the mortgage loan segment,a process that has continued later. He also implemented a deep deregulation of bureaucratic restrictions that limits the potential growth of the financial sector.[12]
Regarding payment methods,he promoted modern payment mechanisms such as PEI (Immediate electronic payment),mobile wallets,mobile payments,Debin,and homogenization of QR codes,which allow for accelerated growth of these alternative payment mechanisms. Likewise,it promoted the divestment of banks in the Prisma company (sole supplier of Visa in the country) in order to make the credit and debit card segment more competitive.[13]
National Congress
Jury of Federico Sturzenegger as National Congressman
As a Congressman,Federico Sturzenegger presented 11 bills and had numerous participations in the Chamber of Deputies. In the year 2014 he was 13ºin a ranking of participation in sessions.[14]
In a session in which a bill proposed by the then Minister of Transportation Florencio Randazzo,that allowed "open access" to the railroad tracks for freight transport,the Congressman managed to include the transport for passengers in this project. The law in question makes available rail infrastructure,to be used by any company created to operate rail freight as well as by individual companies. The National government put this law in practice in 2018.[15]
One of the bills presented by Federico Sturzenegger was one that strived for universal and compulsory education since age 3. Soon after,the government presented a similar project which consisted of the obligation at 4 years of age.[16] Sturzenegger argued that in many parts of the world it was shown that children who receive quality early education at the age of 3–4 years,had lower dropout rates,higher educational level completed,higher wages,better academic performance later,and a lower proportion of them was in the need to receive state social assistance plans.[17]
As the former president of the Banco Ciudad he had a pending issue. After the so-called Conti Law,that took the judicial deposits from Banco Ciudad and transferred them to Banco Nación,[18] he presented a project with the idea of allowing free competition between financial entities in order to attract these deposits,which would result in a higher level of service and better rates for the judicial deposits.[19]
In December 2014 Sturzenegger presented a bill that consisted of implementing a loan scheme with the possibility of granting mortgage loans where the capital of the loan would move in line with the general level of inflation. The proposal was based on the Chilean model of indexed currency,using the Unidad de Fomento. According to the same project,implementing it would significantly reduce the interest rate on mortgage loans,approximating its value to a rental. As the value of capital is preserved,loans of 30 years or more would automatically would develop.[20] Later on,as Governor of the Central Bank he implemented this mechanism,and the result was a significant lending boom in mortgages which led to triple digit growth rates in mortgages.
He also proposed eliminating the minimum prices for the airline industry (the Executive implemented this in 2018),implementing a transparent entry system for the public administration (he implemented such schemes both at Banco Ciudad as well as at the Central Bank),he proposed,following the guidelines of the OECD a project to make firms responsible for corruption (a similar law was approved in 2017),and he proposed a mechanism to ensure social aid beneficiaries not to lose their benefits as they transitioned to formal employment (the government implemented a similar scheme known as Plan Empalme in 2017).
Management of Banco Ciudad
New Headquarter of Banco Ciudad in Parque Patricios
In February 2008 Sturzenegger was appointed president of the Banco Ciudad,a state owned bank property of the Government of the City of Buenos Aires. Before Sturzenegger's appointment the bank was losing money. In the second half of 2007 it had suffered losses over 80million Argentine pesos. In 2013,after six years under Sturzenegger's management,the bank reached a record profit of more than 1300million Argentine pesos,becoming the most profitable state owned company in Argentina. Between the years 2008 and 2012 the bank tripled its net worth and multiplied by 7 its loans to medium and small enterprises,by 6 its loans to large enterprises,and by 4 its mortgage loans.[21]
During Sturzenegger's management the bank became the only one in Argentina to offer a free savings account for all its clients,the only bank that had opened branches in shanty towns,and the only bank to offer loans (including mortgage loans) to people who earned the minimum wage. The bank also became known for pushing new alternatives for transportation,such as those that allowed the client to buy bicycles[22] or for a taxi driver to buy his or her own cab.[21][23]
Sturzenegger's management is known for implementing a unique hiring system based in meritocratic results and inspired in the Brazilian Development Bank. The primary objective of this new system was to promote equal opportunities through a recruiting based on academic results. A first selection was made on academic grades. The preselected group of applicants had then to conduct another exam at the Universidad de Buenos Aires. Those who had studied in public schools were prioritized for the selection.[21]
By the year 2013 the bank was going to move its central headquarter to a new building designed by Norman Foster. The new headquarter was designed with construction standards that would make it the most sustainable public building in Latin America.[24]
Harvard Business School wrote a case study describing the renovation of Banco Ciudad and classifying Sturzeneggers management as one of the two most successful experiences of public company's transformation.[5]
Dark matter is a term coined by Sturzenegger and Ricardo Hausmann to refer to the 'invisible' assets that explain the difference between official estimates of the U.S. current account, and estimates based on the actual return on the U.S. net financial position. Specifically, the U.S. Bureau of Economic Analysis (BEA) estimated the net U.S. current account deficit to be 2.5trillion in 2004. However, according to Sturzenegger and his colleague Ricardo Hausmann, the U.S. current account deficit cannot in reality be as high as it is estimated to be: otherwise, the U.S. would be paying large amounts of interests on its debt. This does not seem to be the case: net income in 2004 was still a positive 30billion, which is not lower than it was in 1980, before the U.S. built up its current account deficit. Thus, the authors argue that the "real" cumulative current account between 1980 and 2004 had in fact been positive, and that somehow a large amount of (foreign) assets are being left out of the calculations.[25][26][27]
The suggested source of this "missing wealth" is dark matter, resulting from the unaccounted export of ideas and other services (such as insurance or liquidity) from the U.S. to other economies. The two authors claim that the U.S. has significant exports, mainly of business know-how bundled with its Foreign direct investment, that do not show up in official trade statistics.[28] These exports increase the real value of its foreign assets, and thus lower the real size of the deficit. Therefore, they argue, there is less reason to worry about the U.S. financial position than is usually assumed. In addition, this dark matter in the U.S. current account also has implications for the accounts of other countries, which have been inadvertently accruing liabilities by importing know-how.[29]
De Facto Exchange Rate Regimes: Deeds vs Words
In a joint work with Eduardo Levy Yeyati, Federico Sturzenegger developed a popular classification of exchange rate regimesde facto in the paper "Classyfing Exchange Rate Regimes: Deeds vs. Words".[30] Stuzenegger and Levy Yeyati sustained that most of the empirical literature on exchange rate regimes were using the IMF de jure classification based on regime announced by the governments, despite the recognized inconsistencies between reported and actual policies in many cases. Many countries that in theory had a flexible exchange rate intervened in exchange markets so pervasively that in practice very little difference existed (in terms of observable performance) with countries that have explicit fixed exchange rate regimes. Conversely, periodic devaluations of pegs in inflation-prone countries were the result of the implementations of monetary policies that were inconsistent with fixed exchange rates and that made the effective regime resemble a flexible arrangement. Moreover, countries that appeared to behave according to the declared regime during tranquil times could be tempted to change their course of action once the regime was under stress. Thus, a very different picture of exchange rate regime choices might have appeared once the international context became more volatile.
The authors proposed a new de facto classification of exchange rate regimes that reflected the actual rather than the announced policies, providing an alternative as well as a complement to the standard de jure approach. Sturzenegger and Levy Yeyati managed to define the exchange rate regimes according to the behavior of three classification variables: changes in the nominal exchange rate, the volatility of these changes, and the volatility of international reserves. Underlying the selection of these variables they made a textbook definition of exchange rate regimes, where fixed exchange rate regimes were associated with changes in international reserves aimed at reducing the volatility in the nominal exchange rate, and flexible exchange rates were characterized by substantial volatility in nominal rates with relatively stable reserves. Thus, the combined behavior of these three classifications was sufficient to determine the regime to which each country belonged at any point in time.
Publications
Advanced Macroeconomics: an Easy Guide. Filipe Campante, Federico Sturzenegger, Andrés Velasco. London: LSE Press, 2021[31]
Related Research Articles
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Veníamos bien, pero de golpe pasaron cosas or simply abbreviated as pasaron cosas, is a phrase that was uttered by Mauricio Macri, former president of Argentina on 17 June 2018 during an interview with Jorge Lanata, well-known for being a fervent opponent of kirchnerism as well of the austere policies of Macri, while trying to justify the worsening of the country's economic situation in the last two months, in which an exchange rate run occurred that culminated in the resignation of the president of the Central Bank of Argentina, Federico Sturzenegger on 14 June, while resigning to the post, it was left an erratic accumulated inflation of 95% and a devaluation of the peso of 175%. By pronouncing the phrase, Macri sought to release the government from any responsibility regarding the country's crisis, stating that it was the product of a greater worldwide situation, in which the world was in a "very volatile financial situation", remainings of the financial crisis of 2007–2008.
Dark matter is a term coined by Federico Sturzenegger and Ricardo Hausmann to refer to the 'invisible' assets that explain the difference between official estimates of the U.S. current account, and estimates based on the actual return on the U.S. net financial position. Specifically, the U.S. Bureau of Economic Analysis (BEA) estimated the net U.S. current account deficit to be 2.5 trillion in 2004. However, according to Sturzenegger and his colleague Ricardo Hausmann, the U.S. current account deficit cannot in reality be as high as it is estimated to be: otherwise, the U.S. would be paying large amounts of interests on its debt. This does not seem to be the case: net income in 2004 was still a positive 30 billion, which is not lower than it was in 1980, before the U.S. built up its current account deficit. Thus, the authors argue that the "real" cumulative current account between 1980 and 2004 had in fact been positive, and that somehow a large amount of (foreign) assets are being left out of the calculations.
1 2 3 Stuzenegger, Federico. Yo no me quiero ir, Editorial Planeta, Buenos Aires, May 2013. Third Edition: Buenos Aires, June 2013. Chapter 9: La gestión de lo público
↑ Mandel, Michael (28 December 2005). "Dark Matter". Archived from the original on 5 January 2006. Retrieved 1 October 2012.
↑ Hausmann, Ricardo; Sturzenegger, Federico; Sibert, Anne; Tille, Cedric (2007). "The missing dark matter in the wealth of nations and its implications for global imbalances". Economic Policy. 22 (51): 469–518. doi:10.1111/j.1468-0327.2007.00182.x. S2CID154574772.
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