Being a relatively-closed economy in comparison with the individual constituent countries has not exempted the euro area economy from a broad range of economic impacts originating from outside its borders. If anything, the impact of external factors has actually been stronger than previously thought. Against this backdrop, the objective of this book is to study the complex interactions between the euro area economy and the growing set of factors representing its external environment.

A number of reasons are identified in this book as having possibly heightened the importance of a better understanding of the external linkages of the euro area. First, while the process of growing world-wide links among economies related to the process of globalisation of trade in goods and financial services has been universal, it may have impacted on the euro area somewhat differently than elsewhere. For example, though being in aggregate a relatively closed economy, the euro area is in fact composed of some rather open economies which are subject to indirect impacts of external shocks via the strong intra-euro area links between the euro area countries. Second, shifts in trade within the euro area have been taking place, led by an acceleration of the ongoing processes of delocalisation of production towards low cost countries, particularly in Eastern Europe. Against this backdrop, the external environment appears to have interacted with the euro area in a different manner than before.