This note estimates several constrained versions of an optimization-based multi-country model to test the sources of heterogeneity within the euro area. We show that the main source is the asymmetry of shocks affecting the economies and that the heterogeneity of behaviors does not seem to be of...

In this paper, we investigate the sources of heterogeneity within the euro area. For this purpose, we build an optimization-based multi-country model (MCM) that allows different sources of heterogeneity across countries, both in terms of behavior of economic agents and in terms of asymmetry of...