CFDS Discussion Paper Series

CFDS is publishing the CFDS Discussion Paper Series focused on studies on financial economics, finance, macroeconomics, and international economics to give all researchers related to our center and Henan University, as well as members of our cooperation partners a chance to publish their ideas and reach a broader academic audience. CFDS Dicsussion Papers are indexed on RePEc.



CFDS is publishing the CFDS Discussion Paper Series focused on studies on financial economics, finance, macroeconomics, and international economics to give all researchers related to our center and Henan University, as well as members of our cooperation partners a chance to publish their ideas and reach a broader academic audience. CFDS Dicsussion Papers are indexed on RePEc.

Papers are accepted and published in English only.


How to participate?

  1. Submit your paper

    There is no deadline for submission and we are reviewing papers on an ongoing basis. To submit please:
    1. Send an email to Kerstin El-Shagi (This email address is being protected from spambots. You need JavaScript enabled to view it.); subject line: CFDS Discussion Papers "The title of your paper"
    2. Include your full name; email; mobile number; institutional affiliation
    3. Attach your paper

    Language Editing: If you require to edit your paper before submitting it, we can recommend using American Journal Experts. If you are looking for a cheaper alternative, individuals on fiverr offer English language editing too.

  2. Peer review: Papers are peer-reviewed and chosen on a rolling basis upon submission. You will be asked to respond to the reviewer´s comments.

  3. Publication: Each Discussion Paper is published and disseminated widely through CFDS's website as well as indexed on RePEc. We are aware that the papers represent preliminary work and are circulated to encourage discussion with you as author. We publish digitally only.

Michael Funke / Rongrong Sun / Linxu Zhu

CFDS Discussion Paper 2018/3


Household borrowing in China has increased considerably in recent years, raising concerns about the household sector’s vulnerability and implications for the stability of the financial system. We construct a number of granular debt-burden indicators at the level of individual Chinese households and calculate the share of households that are financially vulnerable using the three available waves (2011, 2013 and 2015) of China’s Household Finance Survey. Overall loan-to-value (LTV) ratios appear safe and sound at first glance, but closer scrutiny reveals that Chinese households in the lowest income quintile face high vulnerability and struggle to meet their debt commitments. Our stress tests suggest that Chinese households in higher quintiles, despite the huge increase in household indebtedness, are not particularly vulnerable to declining incomes or falling house prices.

Full Paper as PDF

Enzo Dia / Lunan Jiang / Lorenzo Menna / Lin Zhang

CFDS Discussion Paper 2018/2


We document the existence of a substantial dispersion of interest margins charged by commercial banks among Chinese provinces, and we build a parsimonious dynamic stochastic general equilibrium model featuring both banking and production sectors that we calibrate at both the national and provincial level. Our model can explain a considerable share of the interest margin charged in di fferent provinces, and we find support for the hypothesis that Chinese banks adopt a similar technology  across di fferent provinces. Since in the case of Chinese provinces diff erences in wages are substantial, the adoption of a national technology implies an inefficient industrial structure for the banking industry. The adoption of a common nationwide technology generates also a stronger response of the rate on loans to productivity shocks than would be the case if banks adopted di fferent technologies in diff erent provinces, and the capability of banks to smooth regional idiosyncratic productivity shock hitting fi rms declines substantially.

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Makram El-Shagi, Steven Yamarik

CFDS Discussion Paper 2018/1


This paper presents updated estimates for state-level capital and investment for 1950 to 2015. We improve upon the procedure of Garofalo and Yamarik (2002) and Yamarik (2013) by using quantity measures to apportion the mining capital stock and a geometric pattern of depreciation to derive investment data. In an empirical application we use our data to estimate the production function and a simple growth model. We find coefficient estimates that support constant returns to scale and a 1/3 output elasticity of capital. These results are consistent with past regional and cross-country papers, supporting the plausibility of our data.

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Makram El-Shagi, Lin Zhang

CFDS Discussion Paper 2017/5


We assess the role of silver price fluctuations on Chinese trade and GDP during the late Qing dynasty, when China still had a bimetallic monetary system where silver was mostly used for trade. Using a structural VAR with a newly proposed small sample bias correction and blockwise recursive identication, we identify the impact of silver price shocks on the Chinese economy from 1867 to 1910. We find that silver price changes have substantial impact on trade, but barely affect GDP. Our results can partly be applied to the analysis of the role of vehicle currencies in today's emerging economies.


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Jan Klingelhöfer, Rongrong Sun

CFDS Discussion Paper 2017/4


We study the Chinese experience and provide evidence that central banks can play an active role in safeguarding financial stability. The narrative approach is used to disentangle macropudential policy actions from monetary actions. We show that reserve requirements, window guidance, supervisory pressure and housing-market policies can be used for macroprudential purposes. Our VAR estimates suggest that well-targeted macroprudential policy has immediate and persistent impact on credit, but no statistically significant impact on output. Macroprudential policy can be used to retain financial stability without triggering an economic slowdown, or as a complement to monetary policy to offset the buildup of financial vulnerabilities arising from monetary easing. The multi-instrument framework enables central banks to achieve both macroeconomic and financial stability.


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Makram El-Shagi, Yizhuang Zheng

CFDS Discussion Paper 2017/3


In this paper we reexamine the literature on money demand in China published both in English and Chinese language. Over the past 30 years - starting with the paper by Chow (1987) there has been a regular stream of papers assessing the Chinese money demand function. The literature is mostly focusing on income elasticity, stability, and - which is special for
China - the adequate choice and quality of data. In particular regarding stability of money demand, we find a substantial publication bias towards rejecting stability. When controlling for publication bias, and focusing on longer time periods, our paper strongly suggests stable long run money demand in China.


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Makram El-Shagi, Lunan Jiang

CFDS Discussion Paper 2017/2


Although China’s monetary and financial system differs drastically from its Western counterpart, empirical studies covering this vast economy (the largest by some accounts) have often been simple reestimations or recalibrations of models that have originally been designed to describe US or European monetary policy. In this paper, we aim to provide an assessment of Chinese monetary policy and in particular monetary policy transmission through the bond market into the real economy, which takes into account the peculiarities of the Chinese market. Namely, our model includes both China’s modern attempts at a market based policy shock as well as the “authority” based monetary policy that is a relic of the original banking system; it considers the special nature of the Chinese treasury bond market which is separated in two independent markets with very limited direct arbitrage opportunities between almost identical assets, and finally it incorporates the role of real estate, which played an essential role in China during the last decade.


Full Article as PDF


Jonathan Benchimol, Makram El-Shagi

CFDS Discussion Paper 2017/1


Governments, central banks, and private companies make extensive use of expert and market-based forecasts in their decision-making processes. These forecasts can be affected by terrorism, which should be considered by decision makers. We focus on terrorism, as a mostly endogenously driven form of political uncertainty, and use new econometric tests to assess the forecasting performance of market and professional in‡flation and exchange-rate forecasts in Israel. We show that
expert forecasts are better than market-based forecasts, particularly during periods of terrorism. However, forecasting performance and abilities of both market-based and expert forecasts are signifi…cantly reduced during such periods. Thus, policymakers should be particularly attentive to terrorism when considering in‡flation and exchange-rate forecasts.


Full Article as PDF




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