A Study of Trade Imbalance in Eurozone

Abstract

Although the trade balance of the Eurozone is close to equilibrium state, the member countries in the zone are facing continuous trade imbalance. This research assumes that the asymmetrical effect of nominal exchange rate of euro and domestic inflation on trade balance is the main reasons for trade imbalance of member states in the Eurozone. Paying great attention to the adjustment effect of domestic inflation on trade balance is an effective way to alleviate trade imbalance in member countries of the Eurozone.