| Abstract [eng] |
Convergence between the Business Cycles of Central and Eastern European Countries and the Monetary Policy of the European Union The main purpose of the Master’s thesis is to evaluate the business cycle dynamics of Central and Eastern European countries and the suitability of a single monetary policy based on the cycle convergence aspect. The work consists of three main parts; the analysis of literature, an overview of the methodology, research and results. Literature analysis reviews the development of business cycle theory, effects of monetary policy on economic variables and investigated eligibility criteria for a single monetary policy described in the Theory of Optimal Currency Zone. During the literature overview, it was revealed, that the main criterion for conducting a stable common monetary policy is the synchronization of business cycles in all union countries. The main tool for analysing cycle dynamics is a production function described in the Real business cycle theory. The second part of the thesis is methodology in which was introduced the conception of the VECM. The performed research consisted of two parts. First of all, separately analysed Lithuanian, Hungary, Poland, Czech Republic and Slovenian business cycle components- cumulative effect of other factors of production, the marginal product of labour and capital. Secondly, was performed comparative country analysis, the results were also compared with German and French cycle dynamics. The performed research revealed that there is no convergence between business cycles of Central and Eastern European countries. Comparison with the other EU countries also did not show a convergence of cycles. Central and Eastern EU countries have benefited greatly from joining the EU. In particular, it has helped raise capital, increase employment and boost GDP, but it had not helped to bring the business cycle dynamics closer together. The results of the model showed that the business cycles of the Central and Eastern European countries do not converge, which means that according to the provisions of EZ creation and Optimal currency zone theory, these countries are not suitable to adopt one currency - the Euro. It is not appropriate for countries to pursue a single monetary policy. |
