Manuel Menkhoff
@manuelmenkhoff.bsky.social
Thanks a lot Rudi :)
October 27, 2025 at 10:55 AM
Thanks a lot Rudi :)
This paper contributes to work by, among others @aauclert.bsky.social @ludwigstraub.bsky.social @ygorodnichenko.bsky.social @johanneswohlfart.bsky.social @ihaal.bsky.social @bachmannrudi.bsky.social @peterkaradi.bsky.social @joachimjungherr.bsky.social @treinelt.bsky.social
October 27, 2025 at 8:47 AM
This paper contributes to work by, among others @aauclert.bsky.social @ludwigstraub.bsky.social @ygorodnichenko.bsky.social @johanneswohlfart.bsky.social @ihaal.bsky.social @bachmannrudi.bsky.social @peterkaradi.bsky.social @joachimjungherr.bsky.social @treinelt.bsky.social
Link to VoxEU: cepr.org/voxeu/column...
The impact of interest: How loan rates shape firm investment
Monetary policy moves aggregate investment, but the underlying drivers remain unclear. This column opens the black box with a German firm survey. A one percentage point fall in loan rates raises investment by about 7%. Yet many firms do not adjust, often because they have ample cash or are off the margin. Firms’ narratives and their responses to actual monetary policy shocks indicate that the borrowing-cost channel is first-order for policy.
cepr.org
October 27, 2025 at 8:47 AM
Link to VoxEU: cepr.org/voxeu/column...
Link to paper: www.dropbox.com/scl/fi/w2vdd...
www.dropbox.com
October 27, 2025 at 8:47 AM
Link to paper: www.dropbox.com/scl/fi/w2vdd...
2️⃣ We exploit the survey’s panel dimension: one-time vignette responses to borrowing cost changes predict post-shock investment dynamics.
October 27, 2025 at 8:47 AM
2️⃣ We exploit the survey’s panel dimension: one-time vignette responses to borrowing cost changes predict post-shock investment dynamics.
Two approaches to assess the borrowing cost channel’s macro role after @ecb.europa.eu policy changes.
1️⃣Open-text narratives: we ask firms what typically comes up in investment planning when the ECB changes its key rate—when discussed, borrowing costs are top of mind.
1️⃣Open-text narratives: we ask firms what typically comes up in investment planning when the ECB changes its key rate—when discussed, borrowing costs are top of mind.
October 27, 2025 at 8:47 AM
Two approaches to assess the borrowing cost channel’s macro role after @ecb.europa.eu policy changes.
1️⃣Open-text narratives: we ask firms what typically comes up in investment planning when the ECB changes its key rate—when discussed, borrowing costs are top of mind.
1️⃣Open-text narratives: we ask firms what typically comes up in investment planning when the ECB changes its key rate—when discussed, borrowing costs are top of mind.
Hurdle rates are sticky and drive the response.
October 27, 2025 at 8:47 AM
Hurdle rates are sticky and drive the response.
𝐍𝐚𝐫𝐫𝐚𝐭𝐢𝐯𝐞𝐬 𝐟𝐨𝐫 𝐧𝐨𝐧-𝐚𝐝𝐣𝐮𝐬𝐭𝐦𝐞𝐧𝐭: Cash buffers and not being at the margin—investment is driven by capacity. Effects bite most for externally financed and labor-short firms.
October 27, 2025 at 8:47 AM
𝐍𝐚𝐫𝐫𝐚𝐭𝐢𝐯𝐞𝐬 𝐟𝐨𝐫 𝐧𝐨𝐧-𝐚𝐝𝐣𝐮𝐬𝐭𝐦𝐞𝐧𝐭: Cash buffers and not being at the margin—investment is driven by capacity. Effects bite most for externally financed and labor-short firms.
A 1pp cut in lending rates lifts corporate investment by ~7% over two years. This direct response is ≈½ of the total monetary policy effect on investment.
Big heterogeneity: many firms don’t adjust; adjusters ramp up sharply.
Big heterogeneity: many firms don’t adjust; adjusters ramp up sharply.
October 27, 2025 at 8:47 AM
A 1pp cut in lending rates lifts corporate investment by ~7% over two years. This direct response is ≈½ of the total monetary policy effect on investment.
Big heterogeneity: many firms don’t adjust; adjusters ramp up sharply.
Big heterogeneity: many firms don’t adjust; adjusters ramp up sharply.
Beyond magnitudes: the reasons why managers do (not) adjust investment typically remain a black box.
𝐒𝐨𝐥𝐮𝐭𝐢𝐨𝐧: elicit managers’ narratives with open-text questions.
𝐒𝐨𝐥𝐮𝐭𝐢𝐨𝐧: elicit managers’ narratives with open-text questions.
October 27, 2025 at 8:47 AM
Beyond magnitudes: the reasons why managers do (not) adjust investment typically remain a black box.
𝐒𝐨𝐥𝐮𝐭𝐢𝐨𝐧: elicit managers’ narratives with open-text questions.
𝐒𝐨𝐥𝐮𝐭𝐢𝐨𝐧: elicit managers’ narratives with open-text questions.
Identifying the direct effect of borrowing costs is difficult due to scarce exogenous variation and confounding GE forces.
𝐒𝐨𝐥𝐮𝐭𝐢𝐨𝐧: use hypothetical scenarios with loan rate changes (up to 400 bp) in the great ifo survey, holding the macro environment fixed.
𝐒𝐨𝐥𝐮𝐭𝐢𝐨𝐧: use hypothetical scenarios with loan rate changes (up to 400 bp) in the great ifo survey, holding the macro environment fixed.
October 27, 2025 at 8:47 AM
Identifying the direct effect of borrowing costs is difficult due to scarce exogenous variation and confounding GE forces.
𝐒𝐨𝐥𝐮𝐭𝐢𝐨𝐧: use hypothetical scenarios with loan rate changes (up to 400 bp) in the great ifo survey, holding the macro environment fixed.
𝐒𝐨𝐥𝐮𝐭𝐢𝐨𝐧: use hypothetical scenarios with loan rate changes (up to 400 bp) in the great ifo survey, holding the macro environment fixed.
Thanks, Miriam! :)
March 17, 2025 at 4:22 PM
Thanks, Miriam! :)
Thanks, Davide!
March 17, 2025 at 4:21 PM
Thanks, Davide!
Thank you, Christina! :)
March 17, 2025 at 4:20 PM
Thank you, Christina! :)
Thank you, John :)
March 15, 2025 at 8:54 PM
Thank you, John :)
Thanks a lot, Pierre! :)
March 15, 2025 at 8:10 AM
Thanks a lot, Pierre! :)
Thank you, Lennard!
March 14, 2025 at 4:25 PM
Thank you, Lennard!
I'm also deeply grateful to everyone who supported me during the job market and to the many inspiring researchers I had the chance to meet along the way. Looking forward to the next chapter!
March 14, 2025 at 1:43 PM
I'm also deeply grateful to everyone who supported me during the job market and to the many inspiring researchers I had the chance to meet along the way. Looking forward to the next chapter!
Huge thanks to @apeichl.bsky.social , Mirko Wiederholt, Martin Schneider, and @bborn.bsky.social for their incredible support over the past months.
March 14, 2025 at 1:43 PM
Huge thanks to @apeichl.bsky.social , Mirko Wiederholt, Martin Schneider, and @bborn.bsky.social for their incredible support over the past months.
Thanks a lot to my advisor, co-authors, and everyone at ifo & LMU for their support along the journey! @apeichl.bsky.social @bborn.bsky.social Mirko Wiederholt, Martin Schneider @bachmannrudi.bsky.social @peterzorn.de @almutballeer.bsky.social @pschuele.bsky.social
November 11, 2024 at 4:33 PM
Thanks a lot to my advisor, co-authors, and everyone at ifo & LMU for their support along the journey! @apeichl.bsky.social @bborn.bsky.social Mirko Wiederholt, Martin Schneider @bachmannrudi.bsky.social @peterzorn.de @almutballeer.bsky.social @pschuele.bsky.social
Check out the details in my JMP: www.dropbox.com/scl/fi/7cwz8...
And explore my other research on my website: sites.google.com/view/manuelm...
#EconSky #EconJMP #JMP
And explore my other research on my website: sites.google.com/view/manuelm...
#EconSky #EconJMP #JMP
www.dropbox.com
November 11, 2024 at 4:33 PM
Check out the details in my JMP: www.dropbox.com/scl/fi/7cwz8...
And explore my other research on my website: sites.google.com/view/manuelm...
#EconSky #EconJMP #JMP
And explore my other research on my website: sites.google.com/view/manuelm...
#EconSky #EconJMP #JMP
What’s the role of policy?
➡️In a quantitative model, I show that fiscal policy is particularly effective in stimulating investment.
➡️Automatic stabilizers such as generous loss carrybacks mitigate decline in capital stock by around 25% when macro tail risk increases.
➡️In a quantitative model, I show that fiscal policy is particularly effective in stimulating investment.
➡️Automatic stabilizers such as generous loss carrybacks mitigate decline in capital stock by around 25% when macro tail risk increases.
November 11, 2024 at 4:33 PM
What’s the role of policy?
➡️In a quantitative model, I show that fiscal policy is particularly effective in stimulating investment.
➡️Automatic stabilizers such as generous loss carrybacks mitigate decline in capital stock by around 25% when macro tail risk increases.
➡️In a quantitative model, I show that fiscal policy is particularly effective in stimulating investment.
➡️Automatic stabilizers such as generous loss carrybacks mitigate decline in capital stock by around 25% when macro tail risk increases.
To explain these findings, I propose a new mechanism:
➡️A model of firm dynamics with heterogenous & uncertain exposure to macro tail events.
➡️When exposure is ambiguous, even risk-neutral firms cut back investment beyond first and second moments.
➡️A model of firm dynamics with heterogenous & uncertain exposure to macro tail events.
➡️When exposure is ambiguous, even risk-neutral firms cut back investment beyond first and second moments.
November 11, 2024 at 4:33 PM
To explain these findings, I propose a new mechanism:
➡️A model of firm dynamics with heterogenous & uncertain exposure to macro tail events.
➡️When exposure is ambiguous, even risk-neutral firms cut back investment beyond first and second moments.
➡️A model of firm dynamics with heterogenous & uncertain exposure to macro tail events.
➡️When exposure is ambiguous, even risk-neutral firms cut back investment beyond first and second moments.