The Comparison Research Of The Quantitative Easing Monetary Policy And Its Effect Between The USA And Japan

2007A global economic crisis spreading the world, U.S. subprime housingcredit crisis caused stock markets sharply fell, the credit crunch spread rapidlythrough the financial markets. In order to reverse the situation Fed sharply lowered itsbenchmark interest rate. However, financial institutions have a "credit crunch"phenomenon after seen the badly balance sheet, the entire market into a "liquiditytrap." When the federal funds rate to zero, the ability to adjust the interest rate marketis almost completely lost. At this point in order to deal with the crisis, the Fed had totake unconventional monetary policy measures-quantitative easing monetary policy.2001Bank of Japan in response to the economic crisis had taken this innovativemonetary policy which based on the zero interest rate monetary expansion. It used toimprove the money supply to stimulate the economy, so as to inject liquidity into themarket. Since the beginning of December2008the Federal Reserve has conductedfour rounds of quantitative easing monetary policy until December2013began toenter the exit stage.Of course, the economic crisis also spread to Japan, which has just ended in2006the first quantitative easing monetary policy, so once again hit the Japanesedomestic economy. Financial sector crisis quickly spread to the real economy, theeconomic situation of deflation even worse than the birthplace of the United States.Therefore, the Bank of Japan in October2008to make quick decisions, restart relaxedenvironment of low interest rates, in order to improve the situation. Moreover, theBank of Japan in2012also promised inflation target will reach2%in two years, this"super-loose policy" inducing the other country start a more intense currency war. This paper makes a comparative analysis on two quantitative easing monetarypolicy in Japan and the U.S. First of all, it introduced a basic overview of quantitativeeasing monetary policy between Japan and the U.S. The second chapter analyzed thebackground, make a comparative study of the three crises of the two countries. In thethird chapter, the author compared the central bank’s monetary policy, which involvedthe ultimate goal、intermediary objectives and operational objectives. Since the policyobjectives and policy instruments are closely linked together to form a transmissionmechanism of monetary policy, so in part four the article continue to discussmonetary policy tools. The policy instruments are divided into two categories, one istraditional type the other is new type. The fifth chapter will use error correctionmodel (VEC) to focuses on the long-term equilibrium relationship between variables,then analysis the effect of monetary policy among them. The result concluded that:the effect of U.S. quantitative easing monetary policy is significant, Japan’s secondquantitative easing monetary policy is necessary to be continued, while the effectiveof Japan’s first quantitative easing monetary is a little weak.