j. and vestman, r. ( 2017 ), “ household debt and monetary policy : revealing the cash - flow channel, ” swedish house of finance research paper, no 16 - 8 ). furthermore, a thorough general equilibrium approach on households ’ cash - flow type of channel features heterogenous agents from the hank literature ( see footnote 10 ). for firms, the term “ floating - rate channel ” has been used to make a relatively similar point on cash flows ( ippolito, f., ozdagli, a. k. and perez - orive, a. ( 2018 ), “ the transmission of monetary policy through bank lending : the floating rate channel ”, journal of monetary economics, vol. 95, pp. 49 - 71 ). 11. ippolito, f., ozdagli, a. k. and perez - orive, a., ibid. research into past episodes of low interest rates finds that the cash - flow effect of changes in interest rates differs across income cohorts, with lowincome households benefiting the most from low interest rates since 2015 ( battistini, n., falagiarda, m., gareis, j., hackmann, a. and roma, m. ( 2021 ), “ the euro area housing market during the covid19 pandemic ”, economic bulletin, issue 7, ecb ). for the euro area, households with low liquidity account for the majority of the consumption response to monetary policy shocks and there are significant differences across the largest euro area countries, with germany displaying the weakest response and spain the strongest ( slacalek, j., tristani, o. and violante, g. l. ( 2020 ), “ household balance sheet channels of monetary policy : a back of the envelope calculation for the euro area ”, journal of economic dynamics and control, vol. 115 ). 12. on the modelling side, heterogeneous agent new keynesian ( hank ) models have made progress in capturing heterogeneity and different “ cash - flow ” channel components, thereby going beyond the intertemporal substitution channel that is typically captured in representative agent new keynesian ( rank ) models. the collection of detailed granular data on euro area households from the eurosystem ’ s household finance and consumption survey ( hfcs ) has also provided rich insights and informed the modelling. hank models that

in those models that embed a more elaborated financial block that supports real - financial amplification effects and models that feature stronger expectation and confidence channels as entailed in dsge - type models. in addition, models that can better account for the conditional correlations between identified monetary policy impulses and macroeconomic aggregates, as opposed to more reduced - form models, tend to exhibit a stronger impact of monetary policy. such uncertainty motivates the ecb ’ s staff choice to use a suite of models that spans different modelling classes, ranging from fully structural dynamic general equilibrium models to semi - structural models. this notwithstanding, in the current situation of exceptionally high inflation, uncertainty has significantly increased beyond the historically regularities captured by the available models. finally, these estimates do not capture the benefit of preventing adverse non - linear dynamics that could materialise in the absence of policy decisions, which could risk destabilising inflation expectations down the road. accounting for these non - linear dynamics is challenging but would likely point to a larger impact of monetary policy than captured here. chart 4 : response to a standard monetary policy shock : comparison across models ( deviation from baseline in percentage points ) sources : ecb staff calculations. notes : this chart depicts the impulse responses of real output and inflation to a standard short - term interest rate shock ( normalised to 100 basis points ) for the ecb - base model, the ecb new area wide model ( nawm ) and the mmr model. real output refers to the output gap as a percentage of gdp. inflation is in year - on - year percentage change. all responses refer to deviation from the baseline in percentage points. policy effects in international comparison — the role of financial structure structural features imply differences in transmission of monetary policy both across countries and over time. some euro area financial structures may currently dampen the impact of monetary policy in the euro area compared to the past ( typically those features relate to interest rate fixation in private borrowing ), while others ( first and foremost the disruptions in energy supply ) may act as amplifiers. while high inflation certainly reflects global factors related to the rise in energy costs and supply bottlenecks, each central bank faces structures which are unique to their jurisdictions and influence the transmission of monetary policy. chart 5 : ratio between bonds and loans for firms in the euro area versus united states ( ratio of outstanding amounts ) sources : ecb and federal reserve board. note : the latest observation is for the second quarter of 2022