The Effectiveness Of Unconventional Monetary Policy Of The Federal Reserve And Its Impact On Chinese Economy

From November 2008 to may 2013, the Federal Reserve implemented a total of four rounds of quantitative easing monetary policy, that is,unconventional monetary policy,to invested the market a large amount of liquidity.It achieved certain effect,simultaneously brought the spillover effects on other emerging market countries.China is getting closer links with the United States in trade, money and financial aspects, so the Fed’s unconventional monetary policy has a certain research significance.In this paper, we use the comparative and quantitative research methods to study the Fed’s unconventional monetary policy. Contrasting approach is used to analyze the size and structure of Fed’s balance sheet, financial markets and macroeconomic conditions in the United States before and after the implementation of unconventional monetary policy, the following conclusiones are obtained: The implementation of unconventional monetary policy monetary policy brought the rapid expansion of the Fed’s balance sheet size and the change in its structure.It improved the liquidity of the money market, but it had limited role for the expansion of bank credit.American economic output and the employment market increased.Quantitative research methods of VAR model are used to analyze the Fed’s unconventional monetary policy on asset prices, the impact of short-term capital flows of China, the results show that the implementation of unconventional monetary policy will affact Chinese short-term capital inflows, real estate prices.This paper analyzed the theoretical basis of unconventional monetary policy,expounds the necessity of the implementation of the policy from two aspects of the "liquidity trap" and "financial accelerator", explains the spillover channels of unconventional monetary policy from three aspects of exchange rate, interest rate channel and trade routes, describes in detail the framework and implementation of the Federal Reserve unconventional monetary policy. Finally, we analyzed the impact of unconventional monetary policy to China.The following conclusions are obtained:during the financial crisis, the interest rate elasticity of money for prevention demand and investment demand is infinitely large,economy easily falls into the "liquidity trap", economic shock was delivered and aggravated due to credit market imperfect, At this point, we need to use unconventional monetary policy tools to inject liquidity into the economy and improve the credit market, perfect corporate financing conditions.The implementationof the monetary policy will not only affect the domestic economy, but also affect other countries through channels of trade, interest rate and exchange rate. The implementation of the Federal Reserve’s unconventional monetary policy improved the financial market and enhanced the liquidity of the currency market in the United States, but the injection of a large amount of liquidity does not improve its bank credit.It also improved American macroeconomy and increased GDP growth rate,during the implementation the unemployment rate fell and the job market has been improved.The Fed’s unconventional monetary policy has impactions on Chinese trade,short-term cross-border capital flows and asset prices.To deal with the Fed monetary policy’s impactions on China’s economy, China’s monetary policy authorities should take the following measures: Maintain monetary policy independence, strengthen cross-border capital liquidity supervision by means of the quantity and price meathods and strengthen international monetary policy coordination to enhance the effectiveness of monetary policy.There are 3 innovations in this paper as follows.1) We summarized scholars’ s researches on unconventional monetary policy from four aspects of the definition and its classification, conduction mechanism, the implementation and effects of spillover of paper of the unconventional monetary policy.2)In this paper, we use quantitative research in contrast with the qualitative research of the scholars to analyse the impact of unconventional monetary policy on Chinese cross-border capital flows, real estate prices.3)There will be a long-term impact of the monetary policy in the United States on China and the Asia-Pacific region, and now the monetary policies in these countries are different, capital outflows in emerging market countries leaded by low interest rates is more serious, so we propose to strengthen international coordination of monetary policy recommendations in the last part of the paper.