We develop the idea that renormalization, decoupling of heavy particle effects from low energy physics and the construction of effective field theories are intimately linked to the momentum space entanglement of disparate modes of an interacting quantum field theory. Using unitary transformations to decouple these modes at the perturbative level, we show in a scalar field theoretical model with light and heavy fields, how renormalization may be consistently implemented and how the low energy effective field theory can be constructed. We also obtain a renormalization group equation in this framework and apply it to the scalar field theoretical model.
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