Agustín Carstens
Encyclopedia
Agustín Guillermo Carstens Carstens (born in Mexico City
) is a Mexican
economist who has served as Governor of the Bank of Mexico since and was recently seeking to replace Dominique Strauss-Kahn
as managing director of the International Monetary Fund
. In addition, Carstens, along with Christine Lagarde
, was one of the two final candidates to become the managing director of the International Monetary Fund
. He previously served as Secretary of Finance in the cabinet of Felipe Calderón
(2006–09), as deputy managing director of the International Monetary Fund
(2003–06) and as Treasurer of the Bank of Mexico.
(ITAM). After working as an intern in the Bank of Mexico he received a scholarship and completed both a master's degree (1983) and a doctorate in Economics (1985) at the University of Chicago
. His thesis advisor was Michael Mussa, former Economic Counselor and Director of the Department of Research at the International Monetary Fund from 1991 to 2001.
He is married to Catherine Mansell, an academic, writer and economist from the United States
who has authored several books on finance and on literary fiction and nonfiction under the pen name C. M. Mayo
.
In the mid 1980s Carstens returned to Mexico and rejoined the Bank of Mexico. Before turning 30 he was appointed Treasurer, effectively taking charge of the national reserves. Rising through the ranks in the early 1990s, he was appointed Chief of Staff of chairman Miguel Mancera
, and served as Director-General of Economic Research at the end of the 1990s, in charge of designing the Bank's economic policy with governor Guillermo Ortiz Martínez in the aftermath of the Tequila Crisis
and the Russian default crisis. While at the Bank he produced several research articles about the Mexican economy and, in particular, co-authored an analysis of the Mexican Crisis along with then Deputy Governor Francisco Gil Diaz
, which suggests the Mexican crisis was to a large extent an avoidable run on the Mexican peso
brought about by external circumstances and political problems.
Carstens left the IMF to coordinate the economic policy program of Felipe Calderón
, then president-elect
of Mexico, who appointed him as Secretary of Finance shortly after the election was validated.
/IMF Development Committee, a position customarily occupied by a developing country Finance Minister.
As Secretary, Carstens took the unconventional decision to hedge
Mexico's oil earnings for 2009 against possible price falls, leading to an $8 billion profit for the country.
In the aftermath of the 2007 popular protests against rising food prices, Carstens regarded high food prices as a positive driver for investment in agriculture.
, replacing 12-year veteran Guillermo Ortiz, who reduced inflation from double digits to an expected 4 percent by the end of 2009. He was confirmed by the Senate
on with 81 votes in favor and 19 votes against.
Carstens claims that the solution to these problems is for emerging nations to:
Mexico City
Mexico City is the Federal District , capital of Mexico and seat of the federal powers of the Mexican Union. It is a federal entity within Mexico which is not part of any one of the 31 Mexican states but belongs to the federation as a whole...
) is a Mexican
Mexico
The United Mexican States , commonly known as Mexico , is a federal constitutional republic in North America. It is bordered on the north by the United States; on the south and west by the Pacific Ocean; on the southeast by Guatemala, Belize, and the Caribbean Sea; and on the east by the Gulf of...
economist who has served as Governor of the Bank of Mexico since and was recently seeking to replace Dominique Strauss-Kahn
Dominique Strauss-Kahn
Dominique Gaston André Strauss-Kahn , often referred to in the media, and by himself, as DSK, is a French economist, lawyer, politician, and member of the French Socialist Party...
as managing director of the International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
. In addition, Carstens, along with Christine Lagarde
Christine Lagarde
Christine Madeleine Odette Lagarde is a French lawyer and the managing director of the International Monetary Fund since July 5, 2011...
, was one of the two final candidates to become the managing director of the International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
. He previously served as Secretary of Finance in the cabinet of Felipe Calderón
Felipe Calderón
Felipe de Jesús Calderón Hinojosa is the current President of Mexico. He assumed office on December 1, 2006, and was elected for a single six-year term through 2012...
(2006–09), as deputy managing director of the International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
(2003–06) and as Treasurer of the Bank of Mexico.
Early years
Carstens graduated with a bachelor's degree in Economics from the Autonomous Technological Institute of MexicoITAM
ITAM may refer to:*Instituto Tecnológico Autónomo de México, a private research university located in Mexico City, Mexico*IT asset management*Immunoreceptor tyrosine-based activation motif...
(ITAM). After working as an intern in the Bank of Mexico he received a scholarship and completed both a master's degree (1983) and a doctorate in Economics (1985) at the University of Chicago
University of Chicago
The University of Chicago is a private research university in Chicago, Illinois, USA. It was founded by the American Baptist Education Society with a donation from oil magnate and philanthropist John D. Rockefeller and incorporated in 1890...
. His thesis advisor was Michael Mussa, former Economic Counselor and Director of the Department of Research at the International Monetary Fund from 1991 to 2001.
He is married to Catherine Mansell, an academic, writer and economist from the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
who has authored several books on finance and on literary fiction and nonfiction under the pen name C. M. Mayo
C. M. Mayo
-Life:A Texas native, C. M. Mayo was raised in Northern California and educated as an economist at the University of Chicago. She is a long-time resident of Mexico City, where she worked at an investment bank and at ITAM, a private university. At ITAM she taught international and development...
.
In the mid 1980s Carstens returned to Mexico and rejoined the Bank of Mexico. Before turning 30 he was appointed Treasurer, effectively taking charge of the national reserves. Rising through the ranks in the early 1990s, he was appointed Chief of Staff of chairman Miguel Mancera
Miguel Mancera
Miguel Mancera Aguayo is a Mexican economist. He served as general director of the Bank of Mexico from 1982 until 1998.Mancera Aguayo is the son of Rafael Mancera Ortiz and María Luisa Aguayo Cendejas...
, and served as Director-General of Economic Research at the end of the 1990s, in charge of designing the Bank's economic policy with governor Guillermo Ortiz Martínez in the aftermath of the Tequila Crisis
1994 economic crisis in Mexico
The 1994 Economic Crisis in Mexico, widely known as the Mexican peso crisis, was caused by the sudden devaluation of the Mexican peso in December 1994....
and the Russian default crisis. While at the Bank he produced several research articles about the Mexican economy and, in particular, co-authored an analysis of the Mexican Crisis along with then Deputy Governor Francisco Gil Diaz
Francisco Gil Díaz
Francisco Gil Díaz is a Mexican economist who served as Secretary of Finance in the cabinet of President Vicente Fox and currently serves as regional chairman of Telefónica for Mexico and Central America....
, which suggests the Mexican crisis was to a large extent an avoidable run on the Mexican peso
Mexican peso
The peso is the currency of Mexico. Modern peso and dollar currencies have a common origin in the 15th–19th century Spanish dollar, most continuing to use its sign, "$". The Mexican peso is the 12th most traded currency in the world, the third most traded in the Americas, and by far the most...
brought about by external circumstances and political problems.
International Monetary Fund
After many years at the Bank of Mexico, Carstens took a position at the IMF and served as the Deputy Managing Director —one of three Deputies reporting to the Director and the board— from to .Carstens left the IMF to coordinate the economic policy program of Felipe Calderón
Felipe Calderón
Felipe de Jesús Calderón Hinojosa is the current President of Mexico. He assumed office on December 1, 2006, and was elected for a single six-year term through 2012...
, then president-elect
President-elect
An -elect is a political candidate who has been elected to an office but who has not yet been sworn in or officially taken office. These may include an incoming president, senator, representative, governor and mayor.Analogously, the term "designate" An -elect is a political candidate who has been...
of Mexico, who appointed him as Secretary of Finance shortly after the election was validated.
Secretary of Finance
On , Carstens was additionally appointed as new chairman of the joint World BankWorld Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
/IMF Development Committee, a position customarily occupied by a developing country Finance Minister.
As Secretary, Carstens took the unconventional decision to hedge
Hedge (finance)
A hedge is an investment position intended to offset potential losses that may be incurred by a companion investment.A hedge can be constructed from many types of financial instruments, including stocks, exchange-traded funds, insurance, forward contracts, swaps, options, many types of...
Mexico's oil earnings for 2009 against possible price falls, leading to an $8 billion profit for the country.
In the aftermath of the 2007 popular protests against rising food prices, Carstens regarded high food prices as a positive driver for investment in agriculture.
Bank of Mexico
Carstens was nominated to the Bank of Mexico on by President Felipe CalderónFelipe Calderón
Felipe de Jesús Calderón Hinojosa is the current President of Mexico. He assumed office on December 1, 2006, and was elected for a single six-year term through 2012...
, replacing 12-year veteran Guillermo Ortiz, who reduced inflation from double digits to an expected 4 percent by the end of 2009. He was confirmed by the Senate
Senate of Mexico
The Senate of the Republic, constitutionally Chamber of Senators of the Honorable Congress of the Union After a series of reforms during the 1990s, it is now made up of 128 senators:...
on with 81 votes in favor and 19 votes against.
Economic views
He identifies five characteristics of business cycles in emerging economies that distinguish them from those in industrialized nations:- Business cycles in emerging economies are strongly tied to those in industrialized nations.
- Cycles in emerging economies are more volatileVolatility (finance)In finance, volatility is a measure for variation of price of a financial instrument over time. Historic volatility is derived from time series of past market prices...
- Volatility of emerging economies can be affected by additional factors that don't affect industrialized economies, such as price fluctuations
- Rapid capital outflows made possible under corporate globalizationGlobalizationGlobalization refers to the increasingly global relationships of culture, people and economic activity. Most often, it refers to economics: the global distribution of the production of goods and services, through reduction of barriers to international trade such as tariffs, export fees, and import...
can have severely harmful effects on emerging economies - Emerging economies are subject to the problems associated with exchange-rate regimes
Carstens claims that the solution to these problems is for emerging nations to:
- Adopt more open trade and investment regimesFree tradeUnder a free trade policy, prices emerge from supply and demand, and are the sole determinant of resource allocation. 'Free' trade differs from other forms of trade policy where the allocation of goods and services among trading countries are determined by price strategies that may differ from...
- Allow market control of interest rates
- Ensure that their banks are robust enough to handle severe macroeconomic changes
- Enact structural changesStructural adjustmentStructural adjustments are the policies implemented by the International Monetary Fund and the World Bank in developing countries. These policy changes are conditions for getting new loans from the International Monetary Fund or World Bank, or for obtaining lower interest rates on existing loans...
such as central bankCentral bankA central bank, reserve bank, or monetary authority is a public institution that usually issues the currency, regulates the money supply, and controls the interest rates in a country. Central banks often also oversee the commercial banking system of their respective countries...
autonomy, privatizationPrivatizationPrivatization is the incidence or process of transferring ownership of a business, enterprise, agency or public service from the public sector to the private sector or to private non-profit organizations...
of production, reduced regulations over labor markets, and reduced dependence on foreign savings