U.S. Unconventional Monetary Policy Case Analysis

Monetary policy is an important tool for the national macroeconomic control,it is one of the core issues of macroeconomics. Under normal circumstances, the central bank regulate the economy through the conventional monetary policy, but when the benchmark interest rate drops to zero lower bound,the traditional monetary policy lose efficacy.Then the unconventional monetary policy begans to play a role. In 2008,the subprime mortgage crisis broke out, the United States use the conventional monetary policy first, including open market operations to inject liquidity into the market, lowering the federal funds rate and the discount rate. In the implementation of conventional monetary policy conditions to no avail, the Fed introduced unconventional monetary policy to interrupt the process of decline and pull the macroeconomic recovery., the core of the policy is the large-scale asset purchases. Therefore, the assessment of large-scale asset purchases Fed policy is a important issue which has become the focus of national monetary theory and policy makers concerned.This paper take the first two large-scale asset purchases for example to analyze the US unconventional monetary policy, uring the analysis, Using IS-LM model to implement the effect of monetary policy,because the results between IS-LM model to analyze and data analysis is different, the conclusion that large-scale asset purchase policy is lack of effectiveness can be got, therefore using chart analysis and monetary transmission mechanism to explain the deviation. At first,this paper introduce large-scale asset purchase policy transmission mechanism in details,then ese large amounts of data and charts to verify the reasons for lack of policy effectiveness results. Through the The analysis of the effect of the first two large-scale asset purchase program, the Fed large-scale asset purchase program has played an important role in stabilizing the financial markets, boost market confidence, lower long-term interest rates played a certain stimulus. Although the US economy recovered to someextend, the recovery foundation is weak, the growth in consumption and investment is relatively slow, and unemployment rate is rising.Therefore, the Fed’s large-scale asset purchase policy is effective, but also need to cooperate with reform to have a greater impact on the economic recovery.This paper is divided into five chapters on the choice of monetary policy under the zero lower bound constraint research. The first part is an introduction. The second chapter describes the case of the limitations of conventional monetary policy after the US subprime mortgage crisis and the unconventional monetary policy that United States introduced. The third chapter is a case study, Using IS-LM model to analyze the effectiveness of large-scale asset purchases and using policy transmission mechanism to analyze the reasons for the lack of policy effectiveness. The finalchapter is the evaluation of Fed’s large-scale asset purchase program and the reference to China of U.S. large-scale asset purchases policy.