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.

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.Monetäre Transmission,Panel VAR's,einzelwirtschaftliche Investitionen,Deutschland,Monetary Policy Transmission,Panel Data VAR's,Firm-Level Investment,Germany

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

Interaction between Salmonella and Schistosomiasis: A Review.

The interaction between schistosomiasis and Salmonella is a particularly important issue in Africa, where dual infection by the parasite and the bacterium are likely common. In this review, the ways in which schistosomiasis affects human biology as it relates to Salmonella are described. Those who are infected by both organisms experience reduced immunological functioning, exhibit irreversible organ damage due to prolonged schistosomiasis infection, and become latent carriers of Salmonella enterica serotypes Typhi and Paratyphi and S. Typhimurium. The sequestration of the bacteria in the parasite leads to ineffective antibiotic treatment because the bacteria cannot be completely killed, and lingering infection may then lead to antimicrobial resistance. These manifestations are likely not just for those dually infected but also for those first infected with schistosomes and, later, Salmonella. More data are needed to better understand dual infection, particularly as it may impact treatment and prevention of schistosomiasis and Salmonella in sub-Saharan Africa

Incidence of invasive salmonella disease in sub-Saharan Africa: a multicentre population-based surveillance study.

BACKGROUND: Available incidence data for invasive salmonella disease in sub-Saharan Africa are scarce. Standardised, multicountry data are required to better understand the nature and burden of disease in Africa. We aimed to measure the adjusted incidence estimates of typhoid fever and invasive non-typhoidal salmonella (iNTS) disease in sub-Saharan Africa, and the antimicrobial susceptibility profiles of the causative agents. METHODS: We established a systematic, standardised surveillance of blood culture-based febrile illness in 13 African sentinel sites with previous reports of typhoid fever: Burkina Faso (two sites), Ethiopia, Ghana, Guinea-Bissau, Kenya, Madagascar (two sites), Senegal, South Africa, Sudan, and Tanzania (two sites). We used census data and health-care records to define study catchment areas and populations. Eligible participants were either inpatients or outpatients who resided within the catchment area and presented with tympanic (≥38·0°C) or axillary temperature (≥37·5°C). Inpatients with a reported history of fever for 72 h or longer were excluded. We also implemented a health-care utilisation survey in a sample of households randomly selected from each study area to investigate health-seeking behaviour in cases of self-reported fever lasting less than 3 days. Typhoid fever and iNTS disease incidences were corrected for health-care-seeking behaviour and recruitment. FINDINGS: Between March 1, 2010, and Jan 31, 2014, 135 Salmonella enterica serotype Typhi (S Typhi) and 94 iNTS isolates were cultured from the blood of 13 431 febrile patients. Salmonella spp accounted for 33% or more of all bacterial pathogens at nine sites. The adjusted incidence rate (AIR) of S Typhi per 100 000 person-years of observation ranged from 0 (95% CI 0-0) in Sudan to 383 (274-535) at one site in Burkina Faso; the AIR of iNTS ranged from 0 in Sudan, Ethiopia, Madagascar (Isotry site), and South Africa to 237 (178-316) at the second site in Burkina Faso. The AIR of iNTS and typhoid fever in individuals younger than 15 years old was typically higher than in those aged 15 years or older. Multidrug-resistant S Typhi was isolated in Ghana, Kenya, and Tanzania (both sites combined), and multidrug-resistant iNTS was isolated in Burkina Faso (both sites combined), Ghana, Kenya, and Guinea-Bissau. INTERPRETATION: Typhoid fever and iNTS disease are major causes of invasive bacterial febrile illness in the sampled locations, most commonly affecting children in both low and high population density settings. The development of iNTS vaccines and the introduction of S Typhi conjugate vaccines should be considered for high-incidence settings, such as those identified in this study. FUNDING: Bill & Melinda Gates Foundation