A Study On The Spillover Effect Of American Quantified Loan Policy On China 's Inflation

From2008to the beginning of the international financial crisis sweeping theglobe, the economic development of the United States into a serious stagnation andretrogression which, in order to stimulate the domestic economy out of the crisis, theFed uses unconventional monetary policy in times of crisis. After four times of"helicopter money" generally means the implementation of the operation of monetaryexpansion policy to purchase in the hands of government bonds and corporate bondsand other financial institutions have long-term value way to increase the supply ofbase money injected into the markets and financial institutions large flows of capital.Quantitative easing monetary policy tools the central bank at the time of failure oftraditional monetary policy tools used, and the required reserve ratio, the discount rateand open market operations of the three commonly used tools are different,comparison is more similar to the open market operation means. Quantitative easingis basically one-way central banks continue to buy bonds of monetary policy tools toprovide innovative mortgage financing for businesses and financial institutionscontinue to enter the market liquidity. Four QE indeed made the purposes of theUnited States to curb the role of a prolonged recession, but the spillover effects cannotbe ignored. The United States as the world1st economies, to take such a huge scaleexpansionary monetary policy make a substantial increase in the money supply, ledthe national currency devaluation, while also indirectly related to the economy of theircountry and many countries worldwide output of inflationary pressures and pushsome of the industry’s over-investment asset price bubbles. Affect the normal foreigntrade of other countries, by reducing pressure on the exchange rate and capital flowsin emerging economies, monetary policy independence and push the internationalmarket of various types of primary commodities and raw materials prices, the globaleconomy on a coordinated response to the financial crisis adversely affect othermechanisms. Especially as the representative of emerging economies China impact ismore intense, therefore, it is necessary to conduct in-depth study and discussion.The purpose of this study is through theoretical and empirical research to verifywhether America quantitative easing policy will affect the domestic price level, andillustrates the quantitative easing policy is a spillover effect on China’s inflationthrough what channels. Due to the market America injected massive amounts of liquidity and the long-term interest rates remain at low levels of0~0.25%. The pursuitof profit is the nature of capital, therefore, implementation of the quantitative easingpolicy makes a lot of money to find export, emerging economies, including China willbecome the international short-term capital targets. In the four round of the Fed’squantitative easing monetary policy implementation process, with the size of the Fed’sbalance sheet expansion, foreign exchange reserves Chinese also substantial growth inthe last. The massive inflow of international capital will increase China’s foreignexchange reserves lead to an increase in the monetary base of the central bank lending,an important reason for money supply quantity also pushed up domestic prices. At thesame time, the Fed’s weak dollar policy will lead to the decline of the dollar, anddollar denominated international commodity prices will also raise, imported inflationpressure will be hard to ignore.After four rounds of quantitative easing policy implementation, favorable U.S.economic recovery significantly. QE exit the voice of come and go, but theimplementation of any policy has its inevitability, aside of the spillover effect ofeasing, the Fed’s quantitative easing monetary policy in the economic crisis played arole. Major developed economies quantitative easing monetary policy during thefinancial crisis played a stabilizing financial markets, improve liquidity, positive rolein slowing the recession, Bernanke et al point of view provides a strong support andevidence are, and discretionary theory and practice in the choice of monetary policyprovides a pilot experience. Also for the People’s Bank of China monetary policyprovides a useful reference.Theoretical study of the quantitative easing policy and inflation is the foundationand key part of this article. The author hopes that through the theoretical framework,the quantitative easing policy practice, the policy effect, spillover effect, transmissionmechanism and induction system, and to provide some suggestions for similarbecause foreign spillover effects of monetary policy and the higher inflation problemsmay be encountered in China.