The occupied and the unoccupied electronic structure of CeAg$_2$Ge$_2$ single crystal has been studied using high resolution photoemission and inverse photoemission spectroscopy respectively. High resolution photoemission reveals the clear signature of Ce $4f$ states in the occupied electronic structure which was not observed earlier due to the poor resolution. The coulomb correlation energy in this system has been determined experimentally from the position of the $4f$ states above and below the Fermi level. Theoretically the correlation energy has been determined by using the first principles density functional calculations within the generalized gradient approximations taking into account the strong intra-atomic (on-site) interaction Hubbard $U_{eff}$ term. Although the valence band calculated with different $U_{eff}$ does not show significant difference, but the substantial changes are observed in the conduction band. The estimated value of correlation energy from both the theory and the experiment is $approx$4.2~eV for CeAg$_2$Ge$_2$.
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