Does membership of the EMU matter for economic and financial outcomes?

This study examines the effects of joining the European Monetary Union (EMU) using propensity score matching to address self-selection bias. Findings indicate that EMU membership leads to reduced volatility in inflation, output growth, and bond yields. However, it also reveals fiscal deterioration in member states during the pre-financial crisis period, even excluding Greece, Ireland, Portugal, and Spain. These countries experienced favorable bond market conditions pre-crisis. The study underscores varying EMU effectiveness across different periods and countries, emphasizing the importance for policymakers to consider these variations when adopting EMU strategies.