This paper presents an estimated stochastic dynamic general equilibrium (SDGE) model for the euro area, incorporating features such as sticky prices and wages, habit formation, and variable capital utilization. The model is estimated using Bayesian techniques with seven key macroeconomic variables: GDP, consumption, investment, prices, real wages, employment, and the nominal interest rate. The model includes ten orthogonal structural shocks, including productivity, labor supply, investment, preference, cost-push, and monetary policy shocks, allowing for an empirical investigation of their effects on the euro area economy. The paper compares the empirical performance of the SDGE model with standard and Bayesian Vector Autoregressions (VARs), finding that the estimated SDGE model performs better. It also analyzes the effects of various structural shocks, the contribution of these shocks to macroeconomic time series, and calculates potential output and real interest rate gaps. The results suggest that the euro area has a considerable degree of price stickiness, and that the elasticity of labor supply is relatively high. The paper concludes by discussing the implications of these findings for monetary policy analysis and further research.This paper presents an estimated stochastic dynamic general equilibrium (SDGE) model for the euro area, incorporating features such as sticky prices and wages, habit formation, and variable capital utilization. The model is estimated using Bayesian techniques with seven key macroeconomic variables: GDP, consumption, investment, prices, real wages, employment, and the nominal interest rate. The model includes ten orthogonal structural shocks, including productivity, labor supply, investment, preference, cost-push, and monetary policy shocks, allowing for an empirical investigation of their effects on the euro area economy. The paper compares the empirical performance of the SDGE model with standard and Bayesian Vector Autoregressions (VARs), finding that the estimated SDGE model performs better. It also analyzes the effects of various structural shocks, the contribution of these shocks to macroeconomic time series, and calculates potential output and real interest rate gaps. The results suggest that the euro area has a considerable degree of price stickiness, and that the elasticity of labor supply is relatively high. The paper concludes by discussing the implications of these findings for monetary policy analysis and further research.