Two-country DSGE modelling of the euro area: A systematic literature review

This paper reviews the application of two-country Dynamic Stochastic General Equilibrium (DSGE) models in the case of the euro area. By employing a search strategy across Scopus and Web of Science databases, this review identifies "Key Papers" that develop, calibrate, or estimate DSGE models for the euro area and another European country as the second block. There is a particular focus on the gains and losses from the euro adoption to provide a benchmark for a potential future research on the case of the Czech Republic. Out of all the analysed papers, four deal with the welfare consequences of the euro adoption, out of which none concerns the Czech Republic. Thus, developing such model in the future might fill the knowledge gap.