Author: Nadzeya Laurentsyeva Title: Monetary Union of Belarus and Russia - Analysis of Possible Costs for the Belarusian Economy Abstract The thesis analyses alignment of the Belarusian and Russian economies with the aim to infer on costs of the possible monetary union for Belarus. Having estimated a structural vector autoregression model with long-run restrictions, we conclude that the economies have shared common supply and external demand shocks, but other temporary fluctuations have been, in large, asymmetric. Structural discrepancies (as proven by the qualitative analysis) and differences in the monetary policy foci and transmission (as illustrated by the estimation results of Taylor rules and a monetary vector autoregression model) could account for increasing misalignment since 2010. In terms of the welfare costs for Belarus (evaluated with a New Keynesian dynamic stochastic general equilibrium model), the monetary union can be considered preferable to the current monetary policy of the National bank of the Republic of Belarus, while being inferior to the hypothetical inflation targeting regime. The welfare gap between the two arrangements reduces, if stronger domestic price flexibility and higher synchronization of productivity shocks can be assumed.

This diploma thesis deals with the problem of real convergence of new member countries of the Eurozone. Development in recent years in Europe has clearly shown that monetary union is suitable only for homogenous group of countries. The main aim of the thesis is to analyze the progress of convergence in Slovakia, Slovenia and Estonia after the year 2000 and answer the question which country was best prepared to join the monetary union. Used method of investigation is analysis of historical time series and regression analysis. Main conclusion of the thesis is that highest level of convergence was achieved in Slovenia, but the country with lowest cost of joining Eurozone was Estonia. In final part of the thesis is presented own forecast of future development of real convergence until the year 2030. Theoretical background of the prognosis is based on Solow's growth model and resulting theory of convergence.