Federico Sturzenegger

Federico Sturzenegger
National Deputy of Argentina
Incumbent
Assumed office 10 December 2013
Constituency	City of Buenos Aires
Personal details
Born	Federico Adolfo Sturzenegger (1966-02-11) February 11, 1966 Rufino, Argentina
Nationality	Argentine
Political party	PRO
Alma mater	National University of La Plata MIT
Website	Official website

Federico Sturzenegger (February 11, 1966) is an Argentine economist who is currently a National Congressman for PRO and professor at Torcuato di Tella University.^[1] Academically he co-introduced Dark Matter, a regularly used concept in economics to refer to the 'invisible' assets that explain the difference between official estimates of the current account and estimates based on the actual return net financial position. Throughout his academic career he has published close to fifty articles in refereed journals as well as eight books.

Career

Federico Sturzenegger graduated in the year 1987 with an Economics degree at National University of La Plata. He later obtained in 1991 his Ph.D. at Massachusetts Institute of Technology.

Between 1991 and 1994 Sturzenegger was an assistant professor of economics in the University of California. He returned to Argentina in 1995 when José Estenssoro appointed him as Chief Economist of YPF.

In 1998 Sturzenegger left his position in YPF and became Dean in the Business School at Torcuato di Tella University until the year 2001. In 2001 he interrupted his academic profession and decided to participate in the public sector as Secretary of Political Economy in Argentina in the mist of an incoming economic crisis.^[2] In 2002 he returned to his previous occupation as Dean at Torcuato di Tella University until the year 2005.

Between 2005 and 2007 Sturzenegger was a visiting professor of public policy at the John F. Kennedy School of Government, Harvard University. During the year 2005 he was selected as Young Global Leader in the World Economic Forum in Davos^[2] and in 2006 he was awarded the Konex Prize.^[3] In 2008 when Mauricio Macri, the major of the city of Buenos Aires, asks him to act as president of the Bank of the City of Buenos Aires he returns to Argentina.^[3] During his tenure the bank made a big turnaround from losing 160 million 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 1300 million Argentine pesos on 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 Member of the Chamber of Deputies.

Management of Banco Ciudad

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 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.^[6]

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^[7] or for a taxi driver to buy his or her own cab.^[6][8]

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.^[6]

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.^[9]

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

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.^{[10] [11] [12]}

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 no show up in official trade statistics.^[13] 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.^[14]

The idea of dark matter has not gone without criticism. First, Willem Buiter has argued that dark matter should result in a higher rate of return on U.S. external assets than on U.S. external liabilities. However, he claims, there is no convincing evidence that this is the case.^[15] Second, the U.S. income from dark matter seems to vary enormously from year to year, even though it stems from permanent characteristics of the U.S. economy like the export of know-how.^[16] Lastly, Mathew Higgins, Thomas Klitgaard, and Cedric Tille agree with the assertion that U.S. foreign assets are currently undervalued. However, they argue that more important, U.S. foreign liabilities are overvalued. Thus, The U.S. has fewer foreign liabilities than is currently assumed; this fact (rather than dark matter) explains the unexpectedly high net income.^[17] In a 2007 article, Hausmann and Sturzenegger respond to some of these critiques, defending the existence and function of dark matter.^[18]

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 regimes de facto in the paper "Classyfing Exchange Rate Regimes: Deeds vs. Words".^[19] 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.

Books^[1]

8. Yo no me quiero ir, Editorial Planeta, Buenos Aires, May 2013. Third Edition: Buenos Aires, June 2013.

7. The Natural Resources Trap, Private Investment without Public Commitment, joint with William Hogan, MIT Press, Winter 2010.

6. Debt Defaults and Lessons from a Decade of Crisis, joint with Jeromin Zettelmeyer, Cambridge: MIT Press, Winter 2006.

5. El país que queremos, joint with Sergio Berensztein and Horacio Rodríguez Larreta, Editorial Temas, Buenos Aires, June 2006.

4. La Economía de los argentinos, Editorial Planeta, Buenos Aires, May 2003. (Among the 10 best sellers in Argentina for 5 weeks in a row). Second Edition: Buenos Aires, 2005.

3. Dollarization, Debates and Policy Alternatives joint with Eduardo Levy-Yeyati, Cambridge: MIT Press, Winter 2003.

2. Coordinación de políticas macroeconómicas en el MERCOSUR, joint with Jorge Carrera, Editorial, Fondo de Cultura Económica, Buenos Aires: October 2000.

1. The Political Economy of Reform joint with Mariano Tommasi, London and Cambridge: MIT Press, August 1988.

Publications in Refereed Journals^[1]

45. “Exchange Rate Undervaluation and Economic Growth: Diaz Alejandro (1965) Revisited" joint with Pablo Gluzmann and Eduardo Levy Yeyati, Economic Letters, Vol. 117 (3), pp. 666– 672, 2012.

44. “Fear of Appreciation,” joint with Eduardo Levy Yeyati, Journal of Development Economics, Vol. 101, issue C, pages 233-247, 2013.

43. “On the Endogeneity of Exchange Rate Regimes,” joint with Eduardo Levy Yeyati and Iliana Reggio, European Economic Review Vol. 54, No. 5 pp. 659– 677, July 2010.

42. “The Law and Economics of Sovereign Debt” joint with Jeromin Zettelmeyer, and Ugo Panizza, Journal of Economic Literature, Vol. 47 No. 3, September 2009.

41. “Identifying Aggregate Supply and Demand Shocks in South Africa”, joint with Stan Du Plessis and Ben Smit, Journal of African Economies, Vol. 17, No. 5, pp. 765–793. November 2008.

40. “South Africa Macroeconomic Challenges after a Decade of Success”, joint with Jeffrey Frankel and Ben Smit. Economics of Transition, Vol. 16 No. 4, pp. 639–677, October 2008.

39. “Fiscal and Monetary Policy in a Commodity-based Economy”, joint with Jeffrey Frankel and Ben Smit, Economics of Transition, Vol. 16 No. 4, pp. 679–713, October 2008.

38. Comment to “Oil Production in Latin America” by Manzano, O. and F. Monaldi, Economia, Vol. 9, No. 1, pp. 99–101, Fall 2008.

37. “Haircuts: Estimating Investor Losses in Sovereign Debt Restructurings, 1998–2005”, joint with Jeromin Zettelmeyer, Journal of International Money and Finance, Vol. 27, No. 5, pp. 780–805, September 2008.

36. “The growing current account surpluses in East Asia: the effect of dark matter assets,” joint with Ricardo Hausmann and Maya Horii, International Economic Journal, Vol. 22, Issue 2. pp. 141–161, June 2008.

35. “The Impact of Privatization on the Earnings of Restructured Workers,” joint with Sebastián Galiani Journal of Labor Research, Vol. 29, No.2, pp 162–176, 2008.

34. “Estimating SARB´s Policy Reaction Rule,” South African Journal of Economics, Vol. 75 No. 4, December 2007, pp. 1–22, joint with Alberto Ortiz.

33. “The cyclicality of monetary and fiscal policy in South Africa since 1994”, South African Journal of Economics, Vol. 75, No. 3, pp. 391–411, September 2007, joint with Stan Du Plessis and Ben Smit.

32. Comment to “Europe and Global Imbalances” by Philip Lane and Gian Maria Milesi Ferretti, Economic Policy, Vol. 22, Issue 51, pp. 560–565, July 2007.

31. “The Missing Dark Matter in the Wealth of Nations and its Implications on Global Imbalances”, Economic Policy, Vol. 22, Issue 51, pp. 469–518, July 2007, joint with Ricardo Hausmann.

30. “Creditors Losses versus Debt Relief: Results from a Decade of Sovereign Debt Crises,” Journal of the European Economic Association, Vol 5, Issue 2-3, pp 343–351, April–May 2007, joint with Jeromin Zettelmeyer.

29. “The Valuation of Hidden Assets in Foreign Transactions: Why “Dark Matter” matters”, Business Economics, pp. 29–35, January, 2007, joint with Ricardo Hausmann.

28. “Can dark matter prevent a big bang?,” International Finance, Vol. 9, Issue 2, pp. 223–240, August 2006, joint with Ricardo Hausmann.

27. “Fiscal Federalism and Procyclical Spending: The Cases of Argentina and Brazil,” Economica, Vol. VII, No. 2, pp. 315–332, 2006, joint with Rogério L. F. Werneck.

26. “Classifying Exchange Rate Regimes: Deeds vs. Words” European Economic Review, Vol. 49, pp. 1603–1635, 2005, joint with Eduardo Levy Yeyati.

25. “Tools for the Analysis of Debt Problems” Journal of Reconstructing Finance, Vol. 1, No. 1, pp. 201–203, 2004.

24. “On the Consequences of Sudden Stops” Economia, Vol. 4, No. 2, pp. 171–214, Spring 2004, joint with Pablo Guidotti and Agustin Villar.

23. “¿Por qué crecen menos los regímenes de tipo de cambio fijo? El efecto de los suddenstops” Cuadernos de Economía, Año 40, No. 121, pp. 546–655, Diciembre 2003.

22. “To Float or to Trail: Evidence on the Impact of Exchange Rate Regimes” American Economic Review, Vol. 93, No. 4, September 2003, joint with Eduardo Levy Yeyati.

21. “A de facto Classification of Exchange Rate Regimes: A Methodological Note” American Economic Review, Vol. 93, No. 4, September 2003, (posted at http://www.aeaweb.org/aer/contents/), joint with Eduardo Levy Yeyati.

20. “Exchange Rate Regimes and Economic Performance” IMF Staff Papers, Vol. 47, pp. 62–98. 2001 joint with Eduardo Levy Yeyati.

19. “Banking Regulation and Competition with Product Differentiation” Journal of Development Economics, Vol. 63, pp. 85–111, 2000, joint with Ernesto Schargrodsky.

18. “Is EMU a Blue-Print for Latin America?” Cuadernos de Economía, Año 37, No. 110, pp. 63–99, Abril 2000

17. “Implications of the Euro for Latin American Banking and Financial Sectors” Emerging Markets Review, Vol. 1, No. 1, pp. 53–81, 2000, joint with Eduardo Levy Yeyati.

16. “Crazy Explanations of the International Business Cycle” International Economic Review, Vol. 39, No. 1, pp. 111–133, February 1998, joint with Jang-Tin Guo.

15. "La privatización de reservas en el sector hidrocarburífero: el caso de Argentina" Revista de Análisis Económico, Vol. 13, No. 1, June, pp. 75–115, 1998 joint with Nicolas Gadano.

14. “Financial Markets and Inflation under Imperfect Information” Journal of Development Economics, Vol. 54. No. 1, pp. 149–168, October 1997, joint with José De Gregorio. Also published in Mauricio Cárdenas and Sebastián Edwards (eds.) Inflación Estabilización y Política Cambiaria en América Latina, Colombia: TM Editores, January, 1997.

13. “Understanding the Welfare Implications of Currency Substitution” Journal of Economic Dynamics and Control, Vol. 21, pp. 391–416, February 1997.

12. “La Experiencia Argentina con Flujos de Capital en los Noventa” Cuadernos de Economía, Año 34, No. 103, pp. 277–308, December 1997, joint with Joshua Coval.

11. “Recurrent High Inflation and Stabilization: A Dynamic Game” International Economic Review, Vol. 37, No. 4, pp. 981–996, November, 1996, joint with Guillermo Mondino and Mariano Tommasi.

10. “The Feasibility of Monetary Control: Theory and Evidence, with an Application to the Case of Argentina” Policy Reform, Vol. 1, pp. 47–73, 1996, joint with Ricardo López Murphy.

9. “Endogenous Learning and Trade Policy” Economic Letters, Vol. 49, pp. 429–433, 1995.

8. “Las Políticas Fiscales en Economías con Restricciones Financieras” El Trimestre Económico. Vol. LXI, No. 3, pp. 379–408, July–September 1994. (Winner of the Cosio Villegas Prize for best article published that year in the journal).

7. “Distributional Conflict, Financial Adaptation and Delayed Stabilizations” Economics & Politics, Vol. 6, No. 3, pp. 257–278. November, 1994, joint with Raúl Labán.

6. “Fiscal Conservatism as a Response to the Debt Crises” Journal of Development Economics, Vol. 45, November, 1994, joint with Raúl Labán.

5. “Hyperinflation with Currency Substitution: Introducing an Indexed Currency” Journal of Money Credit and Banking, Vol. 26, No. 3, Part 1, pp. 377–395, August 1994.

4. “The Distribution of Political Power, the Costs of Rent Seeking and Economic Growth” Economic Inquiry, Vol XXXII, No. 2, pp. 236–248. April 1994, joint with Mariano Tommasi.

3. “Currency Substitution and the Regressivity of Inflationary Taxation” Revista de Análisis Económico, Vol. 7, No. 1, pp. 177–192, 1992.

2. “Extreme Inflation: Dynamics and Stabilization” Brooking Papers on Economic Activity, Vol. 2, pp. 1–84, 1990, joint with Rudiger Dornbusch and Holger Wolf.

1. “Explicando las Fluctuaciones del Producto en la Argentina”, Económica, Vol. XXXV, No. 1-2, pp. 101– 152, 1989.

Other Articles and Book Chapters

22. "An Estimation of CPI Biases in Argentina 1985–2005 and its Implications on Real Income Growth and Income Distribution.” in Rafael Di Tella and Edward Glaeser (eds.) Argentine Exceptionalism, joint with Pablo Gluzmann, forthcoming.

21. “The effect of Monetary and Exchange Rate policies for development” in Rodrik, D. and Rosenzweig Handbook of Development Economics IV, joint with E. Levy Yeyati. Volume 54, Issue 5, July 2010, Pages 659–677.

20. “Monetary and Fiscal Policies in a Sudden Stop: Is Tighter Brighter?”, in Cavallo, E. and A. Izquierdo Dealing with an International Credit Crunch: Policy Responses to Sudden Stops, Washington, DC: Inter-American Development Bank, 2009, pp. 23–74, joint with Alberto Ortiz, Pablo Ottonello, and Ernesto Talvi.

19. “Currency Boards”, in New Palgrave Second Edition, Stephen Durlauf and Lawrence Blume (eds), Palgrave MacMillan, 2008.

18. “From surpluses to deficits: the effect of dark matter on Latin America”, Revista Globalizacion, Competitividad y Gobernabilidad, Vol 1, No. 1, pp. 48–64, December 2007, joint with Ricardo Hausmann.

17. “Una justificación de los impuestos distorsivos,” Indicadores de Coyuntura, No. 464, pp. 6–9, 2006.

16. “Defaults Episodes in the 1990s: What have we learned?” in Aizenman, Joshua and Brian Pinto (eds.) Managing Economic Volatility and Crises, Cambridge University Press, pp. 471–519, 2005, joint with Punam Chuhan.

15. “Macroeconomic Coordination and Monetary Unions in an N-country World: Do all Roads Lead to Rome?” in Estevadeordal, Antoni, Dani Rodrik, Alan Taylor and Andres Velasco (eds.) Integrating the Americas: FTAA and Beyond, Harvard University Press, pp. 227–256, 2004, joint with Andrew Powell.

14. “The Benefits and Costs of Privatization in Argentina: A Microeconomic Analysis” in Chong, Alberto and Florencio Lopez-de-Silanes (eds.) Privatization in Latin America, Stanford University Press, pp. 67–116, joint with Sebastián Galiani, Paul Gertler and Ernesto Schargrodsky.

13. “Dollarization: A Primer” in Levy-Yeyati, Eduardo and Federico Sturzenegger (eds.) Dollarization, Debates and Policy Alternatives, pp. 1–52, Cambridge: MIT Press, 2003, joint with Eduardo Levy-Yeyati.

12. “Dollarization: The Link between Devaluation and Default Risk” in Levy-Yeyati, Eduardo and Federico Sturzenegger (eds.) Dollarization, Debates and Policy Alternatives, pp. 201–236, Cambridge: MIT Press, 2003, joint with Andrew Powell.

11. Comment to “Are Trade Linkages Important Determinants of Country Vulnerability to Crises?" by Kristen Forbes, in Edwards, Sebastian and Jeffrey Frankel (eds.) Preventing Currency Crises in Emerging Markets, University of Chicago, pp. 124–128, 2002.

10. “Argentina's Experience with Capital Flows during the 1990s" in Larrain, Felipe (ed.) Capital Flows, Capital Controls and Currency Crises, Latin America in the 1990s, University of Michigan Press, pp. 103–142, 2000.

9. “Los Resultados de la Integración en el Mercosur”, in Carrera, Jorge and Federico Sturzenegger (eds.) Coordinación de políticas macroeconómicas en el Mercosur, Buenos Aires: Fondo de Cultura Económica, joint with Jorge Carrera, 2000.

8. “Las Perspectivas de la Coordinación Macroeconómica”, in Carrera, Jorge and Federico Sturzenegger (eds.) Coordinación de políticas macroeconómicas en el Mercosur, Buenos Aires: Fondo de Cultura Económica, joint with Jorge Carrera and Eduardo Levy-Yeyati, 2000.

7. “Introduction” in Sturzenegger, Federico and Mariano Tommasi, The Political Economy of Reform, pp. 1–33, joint with Mariano Tommasi, 1998.

6. “Inflation and the Delay of Stabilizations” in Armijo, Leslie (ed.) Conversations on Democratization and Economic Reform, pp. 118–124, Center for International Studies, USC, 1995.

5. “Bolivia: From Stabilization to What?”inDornbusch, Rudiger and Sebastian Edwards (eds.), Reform, Recovery and Growth, Latin America and the Middle East, Chapter 8, pp. 239-281. University of Chicago Press, 1995.

4. “Growth Issues in Developing Countries: An Introduction” Estudios de Economía, Vol. 20, pp. 3–18, June 1993, joint with Rodrigo Fuentes.

3. “La Economía Política de los Programas de Estabilización” Colección Estudios CIEPLAN, No. 36, pp. 41–66, December 1992, jointwith Raúl Labán.

2. “Description of a Populist Experience: Argentina 1973–1976”, in Dornbusch, Rudiger and Sebastian Edwards (eds.), Macroeconomic Policies and Income Distribution in Latin America, University of Chicago Press. Chapter 4, pp. 77–118, 1991.

1. “Financial Adaptation and the Optimal Time of Financial Liberalization in Eastern Europe”, in O’ Brien, Richard (ed.) Finance and the International Economy, Oxford University Press. Chapter 7, pp. 94–105, 1991.

Working Papers^[1]

7. “A Balance-Sheet Approach to Fiscal Sustainability By Eduardo Levy-Yeyati and Federico Sturzenegger KSG Faculty Research Working Paper Number: RWP07-044 October 2007.

6. “Deciding on Monetary Integration: An operational approach” joint with Andrew Powell, KSG Faculty Research Working Paper Series RPW 07-041, September 2007.

5. “Sovereign Debt in the Americas: New Data and Stylized Facts,” joint with Kevin Cowen, Eduardo Levy Yeyati and Ugo Panizza, IADB Research Department Working Paper, WP-577, October 2006.

4. “Politicas de Crecimiento y de Desarrollo de una Política Industrial”, October 2005.

3. “Culture and Social Resistance to Reform: a Theory about the Endogeneity of Public Beliefs with an Application to the Case of Argentina” joint with Sergio Pernice, October 2003.

2. “Argentina y la agenda de Negociaciones comerciales Internacionales: El Mercosur, el Nafta y la Unión Europea” jointwith Julio Nogués and Pablo Sanguinetti, June, 2001.

1. “Intergenerational Altruism: The Evidence from Argentina,” joint with Pablo Sanguinetti, October 2000.

References

External links

• Personal Webpage
• Federico Sturzenegger on Twitter
• Federico Sturzenegger on Facebook