. We discuss two challenges to successful estimation of DSGE models: potential model misspecification and identification … problems. We argue that prior distributions and Bayesian estimation techniques are useful to cope with these challenges. We … apply these techniques to the two-country model and fit it to data from the U.S. and the Euro Area. We compare parameter …

estimates to values for which the equilibrium is unique. We show how the likelihood-based estimation of dynamic stochastic …