A Research On The Comparison Of U.S., Japan’s And European Quantitative Easing Policy And The Effects On China’s Monetary Policy

The international economic situation began to deteriorate rapidly since the global financial crisis in2008. The outbreak of the European Sovereign Debt Crisis made the global economic and financial situation become more and more serious. The implementation of fiscal policy was greatly limited since most of the developed countries faced serious financial deficit. The implementation of the Zero Interest Rate Policy made the formulation and implementation of the traditional monetary policy under a lot of constraints. Conventional monetary policy is difficult to be formulated. In this context, America, Japan and Europe implemented the Quantitative Easing Policy (QEP) in succession intending to stimulate demand, revive the economy and prevent a recession. With the continuous expansion of China’s opening up, the trade between China and America, Japan, Europe is more and more close, which makes China’s Monetary Policy inevitably affected by U.S., Japan’s and European QEP.This paper studied the effects through VAR model. The results show that U.S., Japan’s and European Quantitative Easing Policy have a significant impact on China’s monetary policy through M2channel, real effective exchange rate channel and interest rate channel. European Quantitative Easing Policy has the biggest contribution to China’s M2, followed by the U.S., Japan’s contribution to the smallest. U.S. Quantitative Easing Policy has the biggest contribution to China’s real effective exchange rate, followed by European., Japan’s contribution to the smallest. U.S. benchmark interest rate has a greater impact on China’s monetary policy than U.S. M2, followed by European, Japan’s benchmark interest rate has the least impact on China’s M2and China’s real effective exchange rate. U.S., Japan’s and European Quantitative Easing Policy adjustment will have an impact on China’s monetary policy. Finally, this paper makes feasible suggestions to reduce those adverse effects.The innovations of this paper are two main aspects. First, this paper focuses on the background, instruments, operates and impact of U.S., Japan’s and European QEP which is a frontier research in this field. Second, this paper do not only research the diffidence in theory, but also uses the VAR model to Continue in-depth analysis the different degree of the effect of U.S., Japan’s and European QEP on China’s monetary policy which makes the results more correct and reliable.