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Monetary transmission in Germany: New Perspectives on Financial Constraints and Investment Spending

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Author Info
von Kalckreuth, Ulf

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Abstract

In order to obtain a better understanding of monetary transmission, this paper assesses the importance of the interest rate and credit channels on business fixed investment in the German manufacturing sector. Our panel of financial statements contains 44,345 observations for 6,408 firms. We uncover a rather solid interest channel. A transitory increase in nominal interest rates by 100 basis points would depress investment demand by almost 4% within the first year. Using our direct measure of creditworthiness, we can also document a balance-sheet channel. Relative to unconstrained firms, financially constrained firms exhibit increased sensitivity to internal funds, and decreased sensitivity to the user cost as well as to market demand. Furthermore, changes in the rating of firms seem to affect investment demand in a way that is consistent with the presence of a balance-sheet channel. Quantitatively, however, this balance-sheet channel seems to be of secondary importance. -- Mit Hinblick auf ein besseres Verständnis der monetären Transmission wird hier die Bedeutung des Zinskanals und des Kreditkanals für die Anlageinvestitionen des Verarbeitenden Gewerbes in Deutschland untersucht. Unser Panel von Jahresabschlüssen enthält 44 345 Beobachtungen aus 6 408 Unternehmen. Es kann ein recht kräftiger Zinskanal isoliert werden. Eine transitorische Erhöhung der Nominalzinsen um 100 Basispunkte könnte die Investitionsnachfrage im Laufe eines Jahres um fast 4% drücken. Mit Hilfe eines direkten Maßes für Kreditwürdigkeit können wir außerdem einen Unternehmensbilanzkanal nachweisen. Im Vergleich zu anderen Firmen weisen finanziell beschränkte Unternehmen eine erhöhte Sensitivität für interne Liquidität auf, sowie eine geringere Reagibilität bezüglich der Kapitalnutzungskosten und der Nachfrage. Weiterhin paßt die Wirkung einer Änderung des Unternehmensratings auf die Investitionsnachfrage zu einem wirksamen Unternehmensbilanzkanal. Jedoch scheint letzterer quantitativ von nachgeordneter Bedeutung zu sein.

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Paper provided by Deutsche Bundesbank, Research Centre in its series Discussion Paper Series 1: Economic Studies with number 2001,19.

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Date of creation: 2001
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Handle: RePEc:zbw:bubdp1:4164

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Related research
Keywords: Monetäre Transmission; Investition; Kapitalnutzungskosten; finanzielle Restriktionen; Kreditkanal; Monetary Transmission; Firm Investment; User Cost; Finance Constraints; Credit Channel;

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Find related papers by JEL classification:
E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
E2 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment

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  1. Jean-Bernard Chatelain & Andrea Generale & Ignacio Hernando & Philip Vermeulen & Ulf von Kalckreuth, 2001. "Firm investment and monetary policy transmission in the Euro area," Working Paper Series 112, European Central Bank. [Downloadable!]
    Other versions:
  2. Andrew Benito & John Whitley, . "Implicit interest rates and corporate balance sheets: an analysis using aggregate and disaggregated UK data," Bank of England working papers 193, Bank of England. [Downloadable!]
  3. J. B. Chatelain & Andrea Generale & I. Hernando & U. von Kalckreuth & P. Vermeulen, 2001. "Firm investment and monetary transmission in the euro area," Temi di discussione (Economic working papers) 431, Bank of Italy, Economic Research Department. [Downloadable!]
  4. Jean-Bernard Chatelain & Andrea Generale & Ignacio Hernando & Ulf Von Kalckreuth & Philip Vermeulen, 2003. "Firm Investment And Monetary Policytransmission In The Euro Area," Post-Print halshs-00112525_v1, HAL. [Downloadable!]
  5. Dietrich Franz, 2006. "Welfarism, Preferencism, Judgmentism," Research Memoranda 005, Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization. [Downloadable!]
  6. Jean-Bernard Chatelain, 2003. "Structural Modelling of FinancialConstraints on Investment: Where Do WeStand?," Post-Print halshs-00112522_v1, HAL. [Downloadable!]
  7. Katharina Raabe & Ivo Arnold & Clemens Kool, 2006. "Firm Size and Monetary Policy Transmission: A Theoretical Model on the Role of Capital Investment Expenditures," Working Papers 06-14, Utrecht School of Economics. [Downloadable!]
  8. Jean-Bernard Chatelain & Andrea Generale & Philip Vermeulen & Michael Ehrmann & Jorge Martínez-Pagés & Andreas Worms, 2003. "Monetary policy transmission in the euro area: New evidence from micro data on firms and banks," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00119489_v2, HAL. [Downloadable!]
    Other versions:
  9. Ignacio Hernando & André Tiomo, 2002. "Financial constraints and investment in France and Spain: a comparison using firm level data," Banco de España Working Papers 0214, Banco de España. [Downloadable!]
  10. Ulf von Kalckreuth, 2003. "Exploring the role of uncertainty for corporate investment decisions in Germany," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 139(II), pages 173-206, June. [Downloadable!]
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