On the German Monetary Transmission Mechanism: Interest Rate and Credit Channels for Investment Spending

The transmission channels through which monetary policy affects business investment remain opaque. This paper examines the importance of the interest rate and credit channels on business fixed investment in Germany. We have at our disposal three uniquely rich datasets -- a panel of financial statement data for 6,408 firms (44,345 datapoints) supplemented with user costs of capital and confidential measures of creditworthiness. We uncover a statistically significant interest rate channel. Its economic significance can be sizeable, but depends on auxiliary assumptions. Sorting firms with our direct measure of creditworthiness, we find that credit constraints are important for a subset of firms. Sortings by firm size or dividend payout ratios shed some light on continuing debates in the literature.

A Vectorautoregressive Investment Model (VIM) and Monetary Policy Transmission: Panel Evidence from German Firms

This paper proposes a new framework for studying the effects of monetary policy on business investment. Important ambiguities with the modeling of investment dynamics and interactions between real and financial decisions suggest modeling investment spending as a VAR. Based on a panel of financial statement data for 6,408 German firms (44,345 datapoints) supplemented with user costs of capital and confidential measures of creditworthiness, we generate GMM estimates of a Vectorautoregressive Investment Model (VIM). It contains investment and cash flow as endogenous variables, and the user costs of capital and sales growth as additional explanatory variables. We report four substantive findings. First, monetary policy matters, and business investment is responsive to interest rates embedded in the user cost of capital. Second, allowing real and financial decisions to interact raises the impact of monetary policy by one-third relative to simulations of an investment equation in isolation that assumes an exogenous financial policy. Third, the sensitivity of investment to cash flow shocks is raised by twothirds relative to single equation computations. Fourth, firms with poor credit ratings are "paralysed" in being unable to react to changing economic conditions as given by relative prices or demand. On the other hand and consistent with binding financing constraints, these endangered firms show a high responsiveness to cash flow shocks. Apart from these substantive conclusions, this paper demonstrate that the panel VAR approach is useful for modeling firm dynamics and real/financial interactions and for assessing monetary policy transmission. -- In diesem Papier wird ein neuer Rahmen für die Untersuchung der Wirkungen von Geldpolitik auf privatwirtschaftliche Investitionen vorgeschlagen. Wegen ungelöster Probleme bei der Modellierung der Investitionsdynamik und der Interaktion zwischen realwirtschaftlicher und der finanzieller Sphäre einer Unternehmung bietet sich die Modellierung der Investitionsentscheidung als VAR an. Auf der Grundlage eines Panels von Jahresabschlüssen für 6,409 deutsche Firmen (44 345 Datenpunkte), erweitert um Kapitalnutzungskosten und vertrauliche Daten über Kreditwürdigkeit, stellen wir GMM-Schätzungen eines vektorautoregressiven Investitionsmodells (VIM) vor. Es enthält die Investition und den Cash Flow als endogene Variablen, und außerdem Kapitalnutzungskosten und Umsatzwachstum als weitere erklärende Variablen Vier inhaltliche Ergebnisse verdienen es, herausgehoben zu werden. Erstens, Geldpolitik ist wirksam, und privatwirtschaftliche Investitionen reagieren auf Änderungen der in den Kapitalnutzungskosten enthaltenen Zinsen. Zweitens, eine Berücksichtigung der Interaktionen von realwirtschaftlichen und finanziellen Entscheidungen erhöht die geschätzte Wirkung von Geldpolitik um ein Drittel im Vergleich zur Simulation einer isolierten Investitionsgleichung, bei welcher die finanzielle Situation als exogen betrachtet wird. Drittens erhöht sich die Sensitivität der Investition bezüglich Cash Flow-Schocks um rund zwei Drittel, verglichen mit einer Einzelgleichungsschätzung. Viertens, Firmen mit geringer Kreditwürdigkeit wirken "gelähmt" ? sie sind nicht in der Lage, sich auf Änderungen der wirtschaftlichen Bedingungen in Gestalt von Relativpreisen oder der Nachfrage einzustellen. Andererseits weisen diese Firmen eine hohe Sensitivität bezüglich Cash Flow- Schocks auf, was konsistent ist mit bindenden Finanzierungsrestriktionen. Abgesehen von diesen inhaltlichen Ergebnissen zeigt das Papier, dass der Panel VAR-Ansatz für die Modellierung der unternehmerischen Dynamik, der Interaktion von realer und finanzieller Sphäre sowie der monetären Transmission zweckmäßig ist.Monetäre Transmission,Panel VAR's,einzelwirtschaftliche Investitionen,Deutschland,Monetary Policy Transmission,Panel Data VAR's,Firm-Level Investment,Germany

Further Evidence On The Relationship Between Firm Investment And Financial Status

The interpretation of the significant relation between business investment spending and cash flow has been controversial. A large body of research has found that investment/cash flow sensitivities are higher for financially constrained firms. This fundamental result underlying the finance constraints hypothesis has been challenged recently by Kaplan, Zingales, and Cleary. The latter author introduces an important new element to this debate by using discriminant analysis, which allows creditworthy firms to be identified using an objective ex-ante criterion based on dividend payouts. Consistent with the Kaplan and Zingales critique, investment/cash flow sensitivities are lower for financially constrained firms. This short paper documents that the use of discriminant analysis does not necessarily lead to lower sensitivities. Our contrasting results are traceable to the use of the firm's creditworthiness as the discriminating variable and appropriate adjustments for endogenous regressors and serially correlated residuals. We document that the investment/cash flow sensitivity is higher for financially constrained firms. -- Die Interpretation der signifikanten Beziehung zwischen unternehmerischen Investitionsausgaben und dem Cash-Flow ist umstritten. Eine größere Anzahl von Forschungsarbeiten kommt zu dem Ergebnis, dass die Sensitivität der Investitionen bezüglich des Cash-Flow bei finanziell beschränkten Unternehmen höher liegt. Dieses für die Theorie finanzieller Beschränkungen grundlegende Resultat wurde in jüngerer Zeit von Kaplan, Zingales und Cleary in Zweifel gezogen. Der letztgenannte Autor führte ein wichtiges neues Element in die Debatte ein: Finanziell beschränkte Unternehmen werden von ihm mit Hilfe eines diskriminanzanalytischen Verfahrens identifiziert, also eines objektiven ex-ante Kriteriums. Im Einklang mit der Kritik von Kaplan und Zingales findet er bei finanziell beschränkten Unternehmen eine geringere Cash-Flow-Sensitivität. Dieses kurze Papier dokumentiert, dass eine diskriminanzanalytische Vorgehensweise nicht notwendigerweise zu einem derartigen Resultat führt. Unsere abweichenden Ergebnisse basieren einerseits auf der Identifikation finanziell beschränkter Unternehmen auf der Basis ihrer Kreditwürdigkeit, andererseits aber auf der Berücksichtigung endogener Regressoren und seriell korrelierter Residuen bei der Schätzung. Wir zeigen auf, dass die Cash-Flow-Sensitivität der Investitionsausgaben bei finanziell beschränkten Unternehmen höher ist.

A Vectorautoregressive Investment Model (VIM) and Monetary Policy Transmission: Panel Evidence from German Firms

This paper proposes a new framework for studying the effects of monetary policy on business investment. Important ambiguities with the modeling of investment dynamics and interactions between real and financial decisions suggest modeling investment spending as a VAR. Based on a panel of financial statement data for 6,408 German firms (44,345 datapoints) supplemented with user costs of capital and confidential measures of creditworthiness, we generate GMM estimates of a Vectorautoregressive Investment Model (VIM). It contains investment and cash flow as endogenous variables, and the user costs of capital and sales growth as additional explanatory variables. We report four substantive findings. First, monetary policy matters, and business investment is responsive to interest rates embedded in the user cost of capital. Second, allowing real and financial decisions to interact raises the impact of monetary policy by one-third relative to simulations of an investment equation in isolation that assumes an exogenous financial policy. Third, the sensitivity of investment to cash flow shocks is raised by twothirds relative to single equation computations. Fourth, firms with poor credit ratings are "paralysed" in being unable to react to changing economic conditions as given by relative prices or demand. On the other hand and consistent with binding financing constraints, these endangered firms show a high responsiveness to cash flow shocks. Apart from these substantive conclusions, this paper demonstrate that the panel VAR approach is useful for modeling firm dynamics and real/financial interactions and for assessing monetary policy transmission.In diesem Papier wird ein neuer Rahmen für die Untersuchung der Wirkungen von Geldpolitik auf privatwirtschaftliche Investitionen vorgeschlagen. Wegen ungelöster Probleme bei der Modellierung der Investitionsdynamik und der Interaktion zwischen realwirtschaftlicher und der finanzieller Sphäre einer Unternehmung bietet sich die Modellierung der Investitionsentscheidung als VAR an. Auf der Grundlage eines Panels von Jahresabschlüssen für 6,409 deutsche Firmen (44 345 Datenpunkte), erweitert um Kapitalnutzungskosten und vertrauliche Daten über Kreditwürdigkeit, stellen wir GMM-Schätzungen eines vektorautoregressiven Investitionsmodells (VIM) vor. Es enthält die Investition und den Cash Flow als endogene Variablen, und außerdem Kapitalnutzungskosten und Umsatzwachstum als weitere erklärende Variablen Vier inhaltliche Ergebnisse verdienen es, herausgehoben zu werden. Erstens, Geldpolitik ist wirksam, und privatwirtschaftliche Investitionen reagieren auf Änderungen der in den Kapitalnutzungskosten enthaltenen Zinsen. Zweitens, eine Berücksichtigung der Interaktionen von realwirtschaftlichen und finanziellen Entscheidungen erhöht die geschätzte Wirkung von Geldpolitik um ein Drittel im Vergleich zur Simulation einer isolierten Investitionsgleichung, bei welcher die finanzielle Situation als exogen betrachtet wird. Drittens erhöht sich die Sensitivität der Investition bezüglich Cash Flow-Schocks um rund zwei Drittel, verglichen mit einer Einzelgleichungsschätzung. Viertens, Firmen mit geringer Kreditwürdigkeit wirken "gelähmt" ? sie sind nicht in der Lage, sich auf Änderungen der wirtschaftlichen Bedingungen in Gestalt von Relativpreisen oder der Nachfrage einzustellen. Andererseits weisen diese Firmen eine hohe Sensitivität bezüglich Cash Flow- Schocks auf, was konsistent ist mit bindenden Finanzierungsrestriktionen. Abgesehen von diesen inhaltlichen Ergebnissen zeigt das Papier, dass der Panel VAR-Ansatz für die Modellierung der unternehmerischen Dynamik, der Interaktion von realer und finanzieller Sphäre sowie der monetären Transmission zweckmäßig ist

On the German Monetary Transmission Mechanism: Interest Rate and Credit Channels for Investment Spending

The transmission channels through which monetary policy affects business investment remain opaque. This paper examines the importance of the interest rate and credit channels on business fixed investment in Germany. We have at our disposal three uniquely rich datasets - a panel of financial statement data for 6,408 firms (44,345 datapoints) supplemented with user costs of capital and confidential measures of creditworthiness. We uncover a statistically significant interest rate channel. Its economic significance can be sizeable, but depends on auxiliary assumptions. Sorting firms with our direct measure of creditworthiness, we find that credit constraints are important for a subset of firms. Sortings by firm size or dividend payout ratios shed some light on continuing debates in the literature

Detection of pathogens of acute febrile illness using polymerase chain reaction from dried blood spots

Quantitative polymerase chain reaction (qPCR) of dried blood spots (DBS) for pathogen detection is a potentially convenient method for infectious disease diagnosis. This study tested 115 DBS samples paired with whole blood specimens of children and adolescent from Burkina Faso, Sudan, and Madagascar by qPCR for a wide range of pathogens, including protozoans, helminths, fungi, bacteria, and viruses. Plasmodium spp. was consistently detected from DBS but yielded a mean cycle threshold (Ct) 5.7 +/- 1.6 higher than that from whole blood samples. A DBS qPCR Ct cutoff of 27 yielded 94.1% sensitivity and 95.1% specificity against the whole blood qPCR cutoff of 21 that has been previously suggested for malaria diagnosis. For other pathogens investigated, DBS testing yielded a sensitivity of only 8.5% but a specificity of 98.6% compared with whole blood qPCR. In sum, direct PCR of DBS had reasonable performance for Plasmodium but requires further investigation for the other pathogens assessed in this study

The Temporal Dynamics of Voluntary Emotion Regulation

Background: Neuroimaging has demonstrated that voluntary emotion regulation is effective in reducing amygdala activation to aversive stimuli during regulation. However, to date little is known about the sustainability of these neural effects once active emotion regulation has been terminated. Methodology/Principal Findings: We addressed this issue by means of functional magnetic resonance imaging (fMRI) in healthy female subjects. We performed an active emotion regulation task using aversive visual scenes (task 1) and a subsequent passive viewing task using the same stimuli (task 2). Here we demonstrate not only a significantly reduced amygdala activation during active regulation but also a sustained regulation effect on the amygdala in the subsequent passive viewing task. This effect was related to an immediate increase of amygdala signal in task 1 once active emotion regulation has been terminated: The larger this peak postregulation signal in the amygdala in task 1, the smaller the sustained regulation effect in task 2. Conclusions/Significance: In summary, we found clear evidence that effects of voluntary emotion regulation extend beyond the period of active regulation. These findings are of importance for the understanding of emotion regulation i

The phylogeography and incidence of multi-drug resistant typhoid fever in sub-Saharan Africa

There is paucity of data regarding the geographical distribution, incidence, and phylogenetics of multi-drug resistant (MDR) Salmonella Typhi in sub-Saharan Africa. Here we present a phylogenetic reconstruction of whole genome sequenced 249 contemporaneous S. Typhi isolated between 2008-2015 in 11 sub-Saharan African countries, in context of the 2,057 global S. Typhi genomic framework. Despite the broad genetic diversity, the majority of organisms (225/249; 90%) belong to only three genotypes, 4.3.1 (H58) (99/249; 40%), 3.1.1 (97/249; 39%), and 2.3.2 (29/249; 12%). Genotypes 4.3.1 and 3.1.1 are confined within East and West Africa, respectively. MDR phenotype is found in over 50% of organisms restricted within these dominant genotypes. High incidences of MDR S. Typhi are calculated in locations with a high burden of typhoid, specifically in children aged <15 years. Antimicrobial stewardship, MDR surveillance, and the introduction of typhoid conjugate vaccines will be critical for the control of MDR typhoid in Africa

How Do Firms Adjust Their Wage Bill in Belgium ? A Decomposition Along the Intensive and Extensive Margins

This paper decomposes wage bill changes at the firm level into components due to wage changes, and components due to net flows of employment. The analysis relies on an administrative employer-employee dataset of individual annual earnings matched with firms' annual accounts for Belgium over the period 1997-2001. Results point to asymmetric behaviour depending on economic conditions. On average, wage bill contractions result essentially from employment cuts in spite of wage increases. Wage growth of job stayers is moderated but still positive; and wages of entrants compared with those of incumbents are no lower. The labour force cuts are achieved through both reduced entries and increased exits. Higher exits may be due to more layoffs, especially in smaller firms, and wider use of early retirement, especially in manufacturing. In addition, the paper points up the role of overtime hours, temporary unemployment and interim workers in adapting to short-run fluctuations