Federico Sturzenegger

Last updated

Federico Sturzenegger
FedericoSturzenegger.jpg
Official portrait, 2024
Minister of Deregulation and State Transformation
Incumbent
Assumed office
5 July 2024

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 2.5 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. [2] [3] [4]

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. [5] 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. [6]

De Facto Exchange Rate Regimes

In their paper "Classyfing Exchange Rate Regimes: Deeds vs. Words," [7] Eduardo Levy Yeyati and Federico Sturzenegger developed a popular classification of exchange rate regimes de facto in the paper "Classyfing Exchange Rate Regimes: Deeds vs. Words". [7] Stuzenegger and Levy Yeyati argued 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.

Private sector

He returned to Argentina in 1995 when José Estenssoro appointed him as Chief Economist of Yacimientos Petrolíferos Fiscales.

Public sector

Secretary of Political Economy of Argentina

In March 2001, during the government of Fernando de la Rúa, he served as Secretary of Political Economy of Argentina in Argentina, within the Ministry of Economy then headed by Ricardo López Murphy. [8] A few days later, López Murphy was replaced by Cavallo's administration, and he resigned at the end of 2001. [9]

Management of Banco Ciudad

New Headquarter of Banco Ciudad in Parque Patricios Obra S. C. Banco Ciudad (89).JPG
New Headquarter of Banco Ciudad in Parque Patricios

In February 2008, Sturzenegger was appointed president of the Bank of the City of Buenos Aires, a publicly owned, municipal commercial bank in Buenos Aires. Before Sturzenegger's appointment the bank was losing money. In the second half of 2007 it had suffered losses over 80 million Argentine pesos. In 2013, after six years under Sturzenegger's management, the bank reached a record profit of more than 1300 million 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. [10]

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 [11] or for a taxi driver to buy his or her own cab. [10] [12]

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. [10]

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. [13]

National Deputy (2013-2015)

In 2013, Federico Sturzenegger resigned as president of Banco Ciudad to become a Member of the Chamber of Deputies as a member of Republican Proposal.

Jury of Federico Sturzenegger as National Congressman Jura Federico Sturzenegger.jpeg
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 13º in 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).

Minister of Deregulation and State Transformation

At the end of 2023, Federico Sturzenegger became a major advisor to newly-elected president Javier Milei to deregulate Argentina's economy. [21]

On July 5, 2024, Milei created a ministry focused on implementing the reforms designed by Sturzenegger and appointed him as minister of this new organization. The name of the new entity was the Ministry of Deregulation and State Transformation. On the same day his appointment was published in the official bulletin, he was sworn in. [22] [23]

On July 18, 2024, he caused some controversy by announcing a bill that aims to include tips as part of the final bill in dining establishments. [24]

Presidency at Central Bank

Between 10 December 2015 and 14 June 2018, he served as President of the Central Bank during Mauricio Macri's administration. [25]

Its management had three central objectives: build a monetary system more suitable for the country, develop the financial system and improve the means of payment technology. [26]

Once the exchange restrictions inherited from the previous administration have been eliminated, he established a inflation targeting regime with a floating exchange rate that generates a pronounced drop in inflation. [27]

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. [28] [29]

Spread Country Risk (EMBI+) for Argentina. The red line marks the 28D event. Embi argentina.png
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. [30]

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. [31]

Publications

Related Research Articles

<span class="mw-page-title-main">Economic history of Argentina</span>

The economic history of Argentina is one of the most studied, owing to the "Argentine paradox". As a country, it had achieved advanced development in the early 20th century but experienced a reversal relative to other developed economies, which inspired an enormous wealth of literature and diverse analysis on the causes of this relative decline. Since independence from Spain in 1816, the country has defaulted on its debt nine times. Inflation has often risen to the double digits, even as high as 5,000%, resulting in several large currency devaluations.

The peso is the currency of Argentina since 1992, identified within Argentina by the symbol $ preceding the amount in the same way as many countries using peso or dollar currencies. It is subdivided into 100 centavos, but due to rapid inflation, coins and notes with a value lower than 500 pesos are now rarely used. Its ISO 4217 code is ARS. It replaced the austral at a rate of 10,000 australes to one peso.

The Convertibility plan was a plan by the Argentine Currency Board that pegged the Argentine peso to the U.S. dollar between 1991 and 2002 in an attempt to eliminate hyperinflation and stimulate economic growth. While it initially met with considerable success, the board's actions ultimately failed. The peso was only pegged to the dollar until 2002.

<span class="mw-page-title-main">Central Bank of Argentina</span> Central bank of Argentina

The Central Bank of the Argentine Republic is the central bank of Argentina, being an autarchic entity.

<span class="mw-page-title-main">José Alfredo Martínez de Hoz</span> Argentine lawyer, businessman, and economist (1925–2013)

José Alfredo Martínez de Hoz was an Argentine lawyer, businessman, and economist. He was the Minister of Economy of Argentina during the country's last military dictatorship (1976—1983), and shaped the economic policy of the dictatorship until its end.

<span class="mw-page-title-main">Ricardo Hausmann</span> Venezuelan economist

Ricardo Hausmann is the former Director of the Center for International Development currently leading the Center for International Development's Growth Lab and is a Professor of the Practice of Economic Development at the Harvard Kennedy School at Harvard University. He is also a former Venezuelan Minister of Planning and former Head of the Presidential Office of Coordination and Planning (1992–1993). He co-introduced several regularly used concepts in economics including original sin, growth diagnostics, self-discovery, dark matter, the product space, and economic complexity.

<span class="mw-page-title-main">Banco de la Nación Argentina</span> Argentine national bank

Banco de la Nación Argentina is a large bank in Argentina, and the largest in the country's banking sector.

Adolfo César Diz was an Argentine economist who was President of the Central Bank of Argentina from 1976 until 1981.

<span class="mw-page-title-main">Alfonso Prat-Gay</span> Argentine economist and politician

Alfonso Prat-Gay is an Argentine economist and politician. Following the election of Mauricio Macri to the presidency on 2015, he became Minister of Economy.

<span class="mw-page-title-main">Bank of the City of Buenos Aires</span>

The Bank of the City of Buenos Aires, doing business as Banco Ciudad, is a publicly owned, municipal commercial bank in Buenos Aires, Argentina. It was founded on May 23, 1878, under the name Monte de Piedad, with the purpose of fighting usury in the city by giving loans at a below-market interest, in order to reduce social inequalities.

<span class="mw-page-title-main">Grupo Financiero Galicia</span> Argentine bank

Grupo Financiero Galicia S.A. is a financial services holding company based in Buenos Aires, and its banking operations are the fifth largest in Argentina, as well as the largest among all domestically-owned private banks in the country.

<span class="mw-page-title-main">Banco Patagonia</span> Argentine commercial bank

Banco Patagonia is an Argentine commercial bank headquartered in Buenos Aires, and has 200 service points located in the main cities and capitals of the provinces of Argentina. The company operates in the individual, as well as small and medium-sized business banking segments, and has currently more than 775,000 clients.

<span class="mw-page-title-main">Economy of Argentina</span>

The economy of Argentina is the second-largest national economy in South America, behind Brazil. Argentina is a developing country with a highly literate population, an export-oriented agricultural sector, and a diversified industrial base.

<span class="mw-page-title-main">Banco Hipotecario</span>

Banco Hipotecario S.A. is a commercial bank and mortgage lender in Argentina. whose operation is based on loans with real guarantee. It was founded in 1886 to solve the housing problem. The bank was privatized in 1997. Faced with the prospect of bankruptcy, in 2005 the State became its majority shareholder. It is a public limited company, with majority state participation but private administration that is dedicated to loans and other financial activities.

<span class="mw-page-title-main">Eduardo Levy Yeyati</span> Argentine economist and author (born 1965)

Eduardo Levy Yeyati is an Argentine economist and author. He is the Dean of the School of Government at Universidad Torcuato Di Tella, where he also directs its Center for Evidence-based Policy (CEPE). He is also a professor at the School of Economics of Universidad de Buenos Aires, and a founding Partner at Elypsis, an economic research firm that he founded in 2011.

<span class="mw-page-title-main">2018–present Argentine monetary crisis</span> Economic situation in Argentina

The 2018–present Argentine monetary crisis is an ongoing severe devaluation of the Argentine peso, caused by high inflation and steep fall in the perceived value of the currency at the local level as it continually lost purchasing power, along with other domestic and international factors. As a result, the presidency of Mauricio Macri requested a loan from the International Monetary Fund.

<span class="mw-page-title-main">Red de Expresos Regionales</span> Planned mass transit system in Buenos Aires

The Regional Express Network was a planned commuter network system in Buenos Aires, which consisted in an underground connection among the 3 mainline railway stations of the city: Retiro, Constitucion and Once, in the north, south and west respectively.

<span class="mw-page-title-main">Marcos Peña</span> Argentine politician

Marcos Peña is an Argentine politician, author and political scientist who served as Chief of the Cabinet of Ministers during Mauricio Macri's presidency.

<span class="mw-page-title-main">Javier Milei</span> President of Argentina since 2023

Javier Gerardo Milei is an Argentine economist and politician who has served as President of Argentina since 2023. He has taught university courses and written on various aspects of economics and politics and also hosted radio programs on the subject. Milei's views distinguish him within mainstream Argentine politics.

<span class="mw-page-title-main">La Libertad Avanza</span> Argentine political coalition and party

La Libertad Avanza is a political coalition and party in Argentina. LLA was formed as an electoral alliance in 2021, and as a nationwide party in 2024. It has been described as far-right, with conservative and ultraconservative stances on social and cultural issues, and as right-wing libertarian or ultra-liberal on economic issues. Its first electoral participation was at the 2021 Argentine legislative election, obtaining the third place with 17% of the votes in the capital.

References

  1. ↑ Maria Fernandez Vidal (2 March 2009). "FEDERICO STURZENEGGER" (PDF). Retrieved 28 June 2014.
  2. ↑ Hausmann, Ricardo; Sturzenegger, Federico (January 2006). "Global Imbalances or Bad Accounting? The Missing Dark Matter in the Wealth of Nations" (PDF). CID Working Paper No. 124.
  3. ↑ Hausmann, Ricardo; Sturzenegger, Frederico (November 2005). "U.S. and Global Imbalances: Can Dark Matter Prevent a Big Bang?" (PDF). CID Working Paper. Working Paper Series. doi:10.1920/wp.cem.2005.1105 (inactive 1 November 2024). hdl: 10419/72009 .{{cite journal}}: CS1 maint: DOI inactive as of November 2024 (link)
  4. ↑ Hausmann, Ricardo; Sturzenegger, Federico (7 December 2005). "Op-Ed: 'Dark Matter' Makes the U.S. Deficit Disappear". Financial Times. Retrieved 1 October 2012.
  5. ↑ Mandel, Michael (28 December 2005). "Dark Matter". Archived from the original on 5 January 2006. Retrieved 1 October 2012.
  6. ↑ 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. S2CID   154574772.
  7. 1 2 Eduardo Levy-Yeyati, Federico Sturzenegger (3 February 2005). "Classifying exchange rate regimes: Deeds vs. words" (PDF). European Economic Review. 49 (6): 1603–1635. doi:10.1016/j.euroecorev.2004.01.001. hdl: 10915/33939 . Archived from the original (PDF) on 6 June 2014. Retrieved 28 June 2014.
  8. ↑ "López Murphy ya eligió a su equipo". La Nación. 9 March 2001. Archived from the original on 16 June 2018. Retrieved 5 August 2024.
  9. ↑ "Federico Sturzenegger | World Economic Forum - Federico Sturzenegger". weforum.org. Retrieved 30 May 2014.
  10. 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
  11. ↑ "Banco Ciudad". bancociudad.com.ar. Retrieved 28 June 2014.
  12. ↑ "Banco Ciudad". bancociudad.com.ar. Retrieved 28 June 2014.
  13. ↑ "Macri muda a Parque Patricios la sede de la jefatura de gobierno de la ciudad - 29.03.2014 - lanacion.com". lanacion.com.ar. 29 March 2014. Archived from the original on 18 December 2017. Retrieved 28 June 2014.
  14. ↑ "Cuánto hablaron los diputados en el recinto - Informes - Parlamentario". 4 January 2024.
  15. ↑ "Por qué apoyamos el proyecto de ferrocarriles". 7 April 2015.
  16. ↑ "Desde este año, será obligatoria la sala de 4 años en todo el país". 7 January 2015.
  17. ↑ Base de Proyectos desde 1999 de ambas Cámaras
  18. ↑ "Ley 26.764 - Traspaso depósitos judiciales del Banco Ciudad al Nación". 17 September 2012.
  19. ↑ Base de Proyectos desde 1999 de ambas Cámaras
  20. ↑ Base de Proyectos desde 1999 de ambas Cámaras
  21. ↑ Ignacio Olivera Doll: Federico Sturzenegger, architect of Argentina’s reforms, says he isn’t even halfway done. Buenos Aires Times, 2023-12-23. Retrieved 2024-01-06.
  22. ↑ Struminger, Brenda (5 July 2024). "Elogiado por Milei, Sturzenegger juró como ministro y comienza su gestión con dudas sobre la interna con Caputo" (in Spanish). infobae. Retrieved 5 August 2024.
  23. ↑ "BOLETIN OFICIAL REPUBLICA ARGENTINA - PODER EJECUTIVO - Decreto 585/2024" (in Spanish). www.boletinoficial.gob.ar. Retrieved 5 August 2024.
  24. ↑ "Proyecto de Ley para Propinas" (in Spanish). Retrieved 5 August 2024.
  25. ↑ "Federico Sturzenegger asume en el Banco Central y habría renuncias masivas de los directores de Kicillof". 5 October 2017.
  26. ↑ "Federico Sturzenegger". www.fsturzenegger.com.ar.
  27. ↑ "Argentina libera el control de capitales". EL PAÍS (in Spanish). 17 December 2015. Retrieved 29 December 2015.
  28. ↑ "Yes, Macri Failed on the Economy. But It Wasn't All for Naught" . Retrieved 4 August 2023.
  29. ↑ Macri’s Macro: The Meandering Road to Stability and Growth brookings.edu
  30. ↑ "El BCRA reglamenta la ampliación de instrumentos para crédito y ahorro de largo plazo". www.bcra.gob.ar.
  31. ↑ "Pagos Electrónicos Inmediatos (PEI)". www.bcra.gob.ar.
  32. ↑ Campante, Filipe; Sturzenegger, Federico; Velasco, Andrés (11 October 2021). Advanced Macroeconomics. LSE Press. doi:10.31389/lsepress.ame. ISBN   978-1-909890-69-5. S2CID   243308844.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.