Chinese Journal of European Studies

Both empirical data and theoretical logics suggest that the establishment of Optimal Currency Area could promote integration and convergence of regional economy, while external shocks may reverse the trend. By extending time horizon, this paper tries to avoid making conclusions on the basis of short-term evidence and to focus on the causes behind fluctuating integration before coming to a conclusion about the future trend and possible challenge of the Eurozone. In this paper, it is found that differences in economic structures and trade patterns have brought different outcomes in different member countries after the same shock, who will, however, finally return to the path of convergence. This paper also provides a theoretical framework to demonstrate the mechanism for the fluctuating integration which is illustrated by the relevant data of the member countries. Since both the structural differences between the member states and external shock are inevitable, the fluctuating integration will be the normal path in the Eurozone. However, it is undeniable that real challenge of divergence in effective exchange rate among member countries in Eurozone will persist.