Research On The US Dollar Liquidity Cycle And Its Spillover Effect

The liquidity spillover effect is in fact an international externality of liquidity, that is, the liquidity level of one country not only plays a role in its domestic economic variables but also affects the stability of financial market and healthy of real economy development in other countries. As one of the sources of global excess liquidity, what kinds of features does the U.S. dollar liquidity have? What impacts can its fluctuations bring to the U.S. economy? What kind of relationship does it have between the U.S. dollar liquidity cycle and the U.S. economic cycle, and even the global economic cycle? What spillover effects will the U.S. dollar liquidity bring to the global economy, and what are the spillover channels? What impacts will it make on China's economy, and how can we react on it? The purpose of this thesis is to answer the questions above.Firstly, by means of analysis and summary about the liquidity concepts and measuring methods, this thesis justifies the total credit volume to be the U.S. liquidity measuring method and, on the base of it, describes the characteristics of the U.S. dollar liquidity. In the release period of liquidity, dollar will be devalued and the price of capital market will rise. But the liquidity will not bring the inflation pressure directly. Besides, the thesis finds that there's a strong relationship between the U.S. dollar liquidity cycle and the U.S. economic cycle.Secondly, from the perspective of global economy, the U.S. dollar liquidity impacts the world economy mainly through trade channels and financial channels. It will influence the pricing system of strategic commodities; trigger global asset price volatility; and shock a country's financial system by influencing its money supply.Thirdly, from the perspective of China's economy, symbiotic savings-consumption pattern and the RMB appreciation pressure jointly promote the U.S. dollar liquidity's spillover to China. The spillover effects are:firstly, it pushes up the real exchange rate, and hit the export sector; secondly, led to currency over-issue through foreign exchange reserves; thirdly, the CPI and nominal rate will rise with excessive capital inflows.