Economic activity in the euro area has weakened since last summer. In the second half of 2002, real GDP increased at an … lasted for two years. Monetary policy in the euro area is clearly expansionary. With only about 0.5 percent, the real … vanished. The situation of public finances in the euro area deteriorated further in the course of last year, with the …

This paper estimates a DSGE model with many types of shocks and frictions for both the US and the euro area economy …