Research On The Theory, Practice And Effect Of Quantitative Easing Moneytary Policy

Quantitative easing monetary policy is an unconventional monetary policy which some central banks implement to react to the financial crisis.The article researches the ideological evolution, theory framework, practice, effectiveness,exit mechanism of the QEP and influence on fiscal sustainability.Chapter 1 defines the quantitative easing monetary policy and chapter 2 hackles the idealogical evolution of QEP. We think the idea of QEP started from the Fed's monetary operation after the great depression.It was becoming deepen along with Japan's bank zero interest rate monetary policy and QEP from 2000 to 2006.Since subprime crisis, Fed's QEP based on the balance sheet channel open a new way for the idealogy.We advance an academic framework for QEP,which consisting of policy aim,medi-objection,policy tools and transmission mechanism and classify policy tools to quantitative easing toos based on money base,expectation management tools and non open-market operation. Then we describe commitment effect,balance-sheet expanding effect and balance-sheet composition effect.Chapter 3 summarizes Japan's QEP during 2001-2006 & QEP responding to world-wide financial crisis,and the first QEP attempts of Fed & ECB.Chapter 4 &5 examine the effectiveness of QEP to financial crisis and economic depression quantificationally and respectively. We set forth 5 financial instability enlargers of shadow banking system in chapter 4. In allusion to 5 enlargers above, Fed design innovative monetary policy tools accordingly to keep monetary policy effective and corresponding.Then we verify the effectiveness of 3 types of monetary policy tools and conclude TAF,PDCF,AMLF are significant when assets purchase programs are not.In addition,we find instability could expand between the inter-bank funds market and commercial paper market,so the innovative monetary policy tools in these two markets could support reciprocally.In chapter 5,we initially describe the mechanism why QEP could be effective to economic depression.It is because that QEP could keep financial market stable to get credit transmission channel through by credit expand,inflation and depreciation.Then we verify the money creation effect during the Fed's QEP and demand expand effect consequently. The result indicates that the QEP is effective to depression.In the first part of chapter 6,we study the direct and indirect mechanism how QEP effects fiscal policy and We find it is necessary and feasible to use QEP to finance fiscal policy,and we think the first and second type policy tools could strengthen validity of fiscal policy, meanwhile the third type tools could cooperate and guarantee fisical stimulation.. In the second part of chapter 6, we check QEP practice and exiting effects to fiscal sustainability of the government. The review to2010-2020 fiscal sustainability of the United States indicates that most of years are not according with No-Ponzi-Game term and Domar term. Contrarily,most of years are according with sustainable framework term.It means maybe we should use framework,not the No-ponzi-Game or Domar term to scale the fiscal sustainability. About exiting effect,we find fisical outlay,interest cost and public debt yield increasing induce fiscal financing scale is enormous. Under the explicit deficit,the QEP exit will not only restrict the speed and quality debt purchase,but also damage fiscal sustainability by affecting the real rate,output and GDP growth rate.Chapter 7 summarizes QEP exit effect, which consisiting of exit practice in USA and Japan, potential exit risk and exit choice of the right moment.If we exit too early,public debt price climbs up and yield decline,even economy may come back to depression.If we exit too late,inflation and asset bubble may happen.We tend to adopt"step-by-step"exit strategy to keep economy recovery steadily. Concretely, the exit mechanism could be separate into automatic and active reduction mechanism.