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We apply the business cycle accounting method proposed by Chari, Kehoe, and McGrattan (2007, Econometrica) for the German stimulus programs and monetary policy measures in 2009. Since the fiscal program includes a cash for clunkers program, we extend the model by durable goods. Wedges correspond to the following variables: government consumption, durables, investment, labor and efficiency. We map the fiscal and monetary measures as well as the repercussions to the prototype economy and explore the consequences. We estimate the wedges in line with maximum-likelihood methods applied by the original authors. Furthermore, we show for n wedges how to reduce the numerical optimization by n(n+1)=2 parameters. This reduction enhances the efficiency and the success of the optimization. We get robust evidence that government consumption and the durable wedge are countercyclical. Measures concerning the countercyclical wedges are effective.
