Globalisation has been one of the most pervasive and important economic trends shaping the world economy over the last two and a half decades or so, leading to greater international economic interdependence across the globe on both the real and financial sides. This has affected a wide range of economic variables as well as providing significant challenges for policy makers. There is no doubt that globalisation has long-run benefits for both advanced and emerging economies through a more efficient resource allocation, along with welfare gains from deepening specialisation, increased competition, lower prices, greater product choice and ultimately higher living standards. Nevertheless, more recently, the increased interconnectedness of economies across the globe has also been associated with global financial turmoil and a highly synchronised global economic downturn.

This book is therefore a timely, as well as highly comprehensive, contribution to the globalisation literature, providing mostly a longer-term perspective while also touching on some of the elements and events associated with the financial crisis that began in mid 2007. The inspiration for this book was the ECB 2007 conference on Globalisation and the Macroeconomy. Hence this volume consists of papers presented at that conference as well as other research papers on this topic. Overall, the book tells us how the international economy has become more connected via increased production, trade, capital flows and financial linkages and how this has possibly affected competitiveness, productivity, inflation and labour markets, while also evaluating some of the potential implications for policy makers. In order to address these issues the papers in the book exploit a variety of methodologies, including both panel econometrics and DSGE modelling. The analysis covers globalisation's impacts in the service sector as well as the more traditional traded goods and manufacturing sectors.