Is GDP growth higher for eurozone members compared to non-eurozone members?

Abstract This thesis examines whether Eurozone membership contributes to higher GDP growth among the countries of the European Union. Using a balanced panel of 27 EU member states over the period 2000–2022, the analysis compares macroeconomic performance between countries that have adopted the euro and those that have not. The empirical section is based on dynamic panel data estimation using the System Generalized Method of Moments (System GMM), which accounts for the endogeneity of explanatory variables and the persistence of economic growth. The results indicate that inflation and trade openness are consistently significant drivers of GDP growth, while Eurozone membership itself does not appear to have a statistically significant impact when controlling for other macroeconomic variables. The analysis also incorporates crisis-specific dummy variables for the 2008–2009 financial crisis and the 2020 COVID-19 pandemic to assess their effects. Findings suggest that these exogenous shocks had a substantial and negative impact on growth across the EU, independent of monetary regime. The theoretical part of the thesis is grounded in the theory of Optimal Currency Areas (OCA), with emphasis on endogeneity of convergence criteria and structural asymmetries between core and peripheral member states. The thesis concludes by highlighting the importance of institutional quality and economic structure in determining the benefits of monetary integration.