This thesis aims to show how vulnerable European economies are to exogenous shocks and business cycles. It also tests if Eurozone economies are more vulnerable than non-Eurozone by comparing how well they recovered from the 2008 economic crisis. This is presented through empirical analysis, analysing economic information and statistical data retrieved from the World Bank and the International Monetary Fund, as well as indicating the pre-crisis challenges and problems the European countries had encountered before the crisis.

The research finds that whether or not a country is a member of the EMU does seem to have an effect on the absorbance and recovery from adverse shocks. There should however be no doubt to the fact that a country’s economic policies do have an impact on how well they perform when facing an exogenous shock.