Study On The Effect Of Quantitative Easing Monetary Policy In Usa To Inflation In China

The world economy has been severely hit since the outbreak of the financial crisis in 2007. In order to get rid of the economic crisis, the United States and Europe have taken a variety of measures to revive the economy. But the market interest rates has tended to zero,resulting in traditional monetary policy and fiscal policy basically lost its’ function. Under this background, the capitalist countries represented by the United States, European Union and Japan have adopted unconventional monetary policy. It is Quantitative Easing Monetary Policy.After 2008, the Fed implemented a total of four quantitative easing monetary policies. The US dollar is the world currency. The increase supply of US dollars is bound to affect the development of China’s economy. The most important impact is the increasing of inflation level in recent years. In Jan. 2014, the United States announced to quit the quantitative easing monetary policy. The quit of QE will have a reverse fluctuation to the development of China’s economy. Therefore, the study of US quantitative easing monetary policy and its impact to the inflation of our country has a great theoretical and practical significance. It relates to the stable development of China’s economy and the orientation of government monetary policy.Firstly, there is an overview of monetary policy theory, international transmission mechanism of monetary policy and the relevant of inflation theories. It lays the theoretical foundation for the article. Secondly, the article analyzes the American four-wheel quantitative easing monetary policy and its quit, as well as the current situation of China’s inflation. Thirdly, the article analyzes the impact of US quantitative easing monetary policy to the inflation of our country. The most important is the select of transmission channel. In this article, we choose three channels, namely international trade channels, capital input channels and monetary expansion channels. Finally, selecting the monthly data from Jan. 2007 to Jan.2014. By using Eviews6.0 Software, we empirical analyze the impact of US money supply, international commodity price index, China’s imports of commodity price index, RMB exchange rate, international capital flows, foreign exchange, Chinese money supply on China’s CPI and PPI. The study found that the US quantitative easing monetary policy’s impact on PPI which is greater than the impact on CPI. According to the analysis of the empirical results, we combined the reality of our situation and put forward six policy recommendations in order to stable the level of inflation and create a good economic development environment.