In this paper, we examine how different household consumption items respond to monetary policy shocks in the euro area. Specifically, we classify household consumption along two key dimensions: durability and essentiality. Our findings reveal pronounced heterogeneity in responses across these dimensions. First, durable items are highly sensitive to monetary policy shocks, whereas non-durable items exhibit weaker responses. Second, non-essential items react more strongly than essential items. Finally, we demonstrate that durability and essentiality each independently shape the sensitivity of household consumption to monetary policy shocks, with durable non-essential items being most strongly affected.
Nothing contributes so much to the prosperity and happiness of a country as high profits