Monetary Policy and Liquidity Constraints: Evidence from the Euro Area

In 2016, 30 percent of households in Germany reported that they could not meet an unexpected, immediate expense of 985 euros. At the same time, 40 percent of Italian households reported that they would be unable to meet an unexpected expense of 800 euros.1 Figures like these suggest that a significant portion of households hold few liquid assets, which potentially makes them vulnerable to unexpected shocks to the economy. These households have received special attention recently, especially in monetary economics.