The Implementation And Reference Of U.S. Monetary Policy

As an important world economy and the international reserve currency country,the US has been playing a crucial role in the world for a long time.With higher significance of macroeconomic regulation,the adjustment of US monetary policy not only affects the development of the US economy,but also impacts the international financial market through the interest rate or exchange rate channel.The monetary policy decisions of emerging economies including China are influenced as well.This paper will analyze the relativity between the adjustment of US monetary policy and the development of US economy.According to the adjustment of Federal funds rate,the monetary policy adjustment from 1995 to 2018 has been divided into four accommodative stages and three less accommodative stages and each stage will be analyzed carefully.The relationship between the adjustment of US monetary policy and the development of US economy will be analyzed qualitatively according to the change of crucial economic indicators in each stage mentioned above.At the same time,the structural vector auto-regression model will be established in accordance with federal fund rate,monetary supply,inflation rate,unemployment rate and the growth rate of gross industrial product,and the impulse response function and variance decomposition method will be used to evaluate the correlation between the adjustment of monetary policy and the development of US economy.According to the research,the monetary policy adjustments of Federal Reserve correlates highly with the development of US economy and the policy adjustments are pertinent and help to reach the monetary policy targets.The specific policy targets are different in different chairman tenure.The monetary policy rules are adjusted in accordance with policy target and economic development.Besides,although different chairman holds different policy proposal,they all basically achieve the targets.The future adjustment of U.S.monetary policy and economic development are predicted as well.In 2019,the U.S labor market will keep strong,the level of inflation can be controlled and will be near the objective of 2%.However,the housing market,financial market and indicators of consumer confidence show the sign of slow economic growth.Therefore,the Federal Reserve may stop increasing Federal fund rates,and the balance sheet normalization program may be terminated.Therefore,the thesis provides policy suggestions to adjustment of monetary policy of China.Strengthen forward guidance and the cooperation between monetary policy and fiscal policy.