Professor Dr Makram El-Shagi

Professor Dr Makram El-Shagi
Current Position

since 1/15

Research Professor

Halle Institute for Economic Research (IWH) – Member of the Leibniz Association

since 8/14


Henan University, School of Economics, China

Research Interests

  • financial market stability and instability: regulation and consequences on the real economy
  • exchange rate policy and monetary policy

Makram El-Shagi joined the institute as a Research Professor in January 2015. His research focuses on monetary macroeconomics, econometrics, and international macroeconomics.

Makram El-Shagi holds the position of Professor at Henan University in China und he is Director of the "Center for Financial Development and Stability". Prior to that, he was Visiting Associate Professor at California State University, Long Beach as well as Senior Economist at IWH.

Your contact

Professor Dr Makram El-Shagi
Professor Dr Makram El-Shagi
Mitglied - Department Macroeconomics
Send Message



Why They Keep Missing: An Empirical Investigation of Sovereign Bond Ratings and Their Timing

Gregor von Schweinitz Makram El-Shagi

in: Scottish Journal of Political Economy, No. 2, 2022


Two contradictory strands of the rating literature criticize that rating agencies merely follow the market on the one hand, and emphasizing that rating changes affect capital movements on the other hand. Both focus on explaining rating levels rather than the timing of rating announcements. Contrarily, we explicitly differentiate between a decision to assess a country and the actual rating decision. We show that this differentiation significantly improves the estimation of the rating function. The three major rating agencies treat economic fundamentals similarly, while differing in their response to other factors such as strategic considerations. This reconciles the conflicting literature.

read publication


Fiscal Policy and Fiscal Fragility: Empirical Evidence from the OECD

Makram El-Shagi Gregor von Schweinitz

in: Journal of International Money and Finance, July 2021


In this paper, we use local projections to investigate the impact of consolidation shocks on GDP growth, conditional on the fragility of government finances. Based on a database of fiscal plans in OECD countries, we show that spending shocks are less detrimental than tax-based consolidation. In times of fiscal fragility, our results indicate strongly that governments should consolidate through surprise policy changes rather than announcements of consolidation at a later horizon.

read publication


Trade Effects of Silver Price Fluctuations in 19th-Century China: A Macro Approach

Makram El-Shagi Lin Zhang

in: China Economic Journal, 2020


We assess the role of silver price fluctuations in Chinese trade and GDP during the late Qing dynasty, when China still had a bimetallic (silver/copper) monetary system, in which silver was mostly used for international trade. Using a structural VAR (SVAR) with blockwise recursive identification, we identify the impact of silver price shocks on the Chinese economy from 1867, when trade data became available, to 1910, one year before the Qing dynasty collapsed. We find that silver price shocks had a sizable impact on both imports and exports but only a very minor effect on the trade balance, only a marginal impact on growth, and almost no effect on domestic prices. Stronger effects were partly mitigated by inelastic export quantities. Generally, the effect of silver price shocks, while considerable, was only short-lived, displaying no persistence in either direction. We find that the bimetallic system in Qing China might have mitigated a potential positive effect of silver depreciation but did not reverse the effect, which – contrary to claims made in the previous literature – was responsible for neither the worsening trade balance nor the inflation and the quickly increasing imports that occurred during our sample period.

read publication

Working Papers


Much Ado About Nothing: Sovereign Ratings and Government Bond Yields in the OECD

Makram El-Shagi

in: IWH Discussion Papers, No. 22, 2016


In this paper, we propose a new method to assess the impact of sovereign ratings on sovereign bond yields. We estimate the impulse response of the interest rate, following a change in the rating. Since ratings are ordinal and moreover extremely persistent, it proves difficult to estimate those impulse response functions using a VAR modeling ratings, yields and other macroeconomic indicators. However, given the highly stochastic nature of the precise timing of ratings, we can treat most rating adjustments as shocks. We thus no longer rely on a VAR for shock identification, making the estimation of the corresponding IRFs well suited for so called local projections – that is estimating impulse response functions through a series of separate direct forecasts over different horizons. Yet, the rare occurrence of ratings makes impulse response functions estimated through that procedure highly sensitive to individual observations, resulting in implausibly volatile impulse responses. We propose an augmentation to restrict jointly estimated local projections in a way that produces economically plausible impulse response functions.

read publication


Regulation, Innovation and Technology Diffusion - Evidence from Building Energy Efficiency Standards in Germany

Makram El-Shagi Claus Michelsen Sebastian Rosenschon

in: Discussionpapers des DIW Berlin, No. 1371, 2014


The impact of environmental regulation on technology diffusion and innovations is studied using a unique data set of German residential buildings. We analyze how energy efficiency regulations, in terms of minimum standards, affects energy-use in newly constructed buildings and how it induces innovation in the residential-building industry. The data used consists of a large sample of German apartment houses built between 1950 and 2005. Based on this information, we determine their real energy requirements from energy performance certificates and energy billing information. We develop a new measure for regulation intensity and apply a panel-error-correction regression model to energy requirements of low and high quality housing. Our findings suggest that regulation significantly impacts technology adoption in low quality housing. This, in turn, induces improvements in the high quality segment where innovators respond to market signals.

read publication


Monetary Policy in a World Where Money (Also) Matters

Makram El-Shagi Sebastian Giesen

in: IWH Discussion Papers, No. 6, 2012


While the long-run relation between money and inflation as predicted by the quantity theory is well established, empirical studies of the short-run adjustment process have been inconclusive at best. The literature regarding the validity of the quantity theory within a given economy is mixed. Previous research has found support for quantity theory within a given economy by combining the P-Star, the structural VAR and the monetary aggregation literature. However, these models lack precise modelling of the short-run dynamics by ignoring interest rates as the main policy instrument. Contrarily, most New Keynesian approaches, while excellently modeling the short-run dynamics transmitted through interest rates, ignore the role of money and thus the potential mid-and long-run effects of monetary policy. We propose a parsimonious and fairly unrestrictive econometric model that allows a detailed look into the dynamics of a monetary policy shock by accounting for changes in economic equilibria, such as potential output and money demand, in a framework that allows for both monetarist and New Keynesian transmission mechanisms, while also considering the Barnett critique. While we confirm most New Keynesian findings concerning the short-run dynamics, we also find strong evidence for a substantial role of the quantity of money for price movements.

read publication
Mitglied der Leibniz-Gemeinschaft LogoTotal-Equality-LogoWeltoffen Logo