Third, the production structure has become more outward-oriented, although this has occurred against a background of recession in the domestic economy. Starting with the changes in the real economy, the transition to a new, more extrovert growth model has already begun and can be expected to continue.
You can also see why the heterogeneity becomes a factor in assessing low inflation in the euro area. Calibrating the policy response What is the right policy response to these developments? Essentially, we are confronting three issues that might warrant a response. First, the common effect of exogenous factors, including the exchange rate, on euro area inflation.