We use Bayesian methods to estimate a simplified version of PESSOA, a medium scale small-open Dynamic Stochastic General Equilibrium model featuring key characteristics of an economy integrated in a monetary union. Financial factors emerge as the most important driving force of business cycle fluctuations since the Euro Area inception. The 2008--2009 recession was primarily driven by external and tecnhological factors, whereas the 2011--2013 downturn was triggered by fiscal and financial developments, and latter amplified by technology shocks.