A Study On The Impact Of Fed's Interest Rate Changes On China's Capital Outflow

In the context of global economic integration,the links between countries have become closer.When a country's monetary policy changes,the change may have spillover effects on other countries and thus affect the economic environment of other countries.The United States is a superpower in the world,changes in its monetary policy are bound to affect other countries in the world.At present,the Fed's monetary policy is highly uncertain,and the direction and magnitude of the impact on other countries are also uncertain.China's capital outflow is bound to be greatly affected by its changes.Through research,this paper finds that every change in the Fed's interest rate will cause capital flows around the world,and by observing the situation of China's capital flows after the recent changes in the Fed's interest rate,it can be found that it is different from the past changes in the Fed's interest rate,after the recent changes in the Fed's interest rate,China's capital outflow has undergone a large-scale change,so it can be considered that the impact of the Fed's interest rate change on China's capital outflow has changed.Therefore,we should not only pay attention to the cyclical impact of Fed interest rate changes on China's capital outflow,but also pay attention to whether the impact of Fed interest rate changes on China's capital outflow has time-varying and structural changes.Through the study of the existing literature,most of the studies have analyzed China's capital outflow from the perspective of influencing factors,and there are few literatures that discuss the impact of the channel mechanism on China's capital outflow.Therefore,this article will analyze the impact of changes in the Fed's interest rate on the scale and structure of China's capital outflow based on the transmission mechanism from a time-varying perspective,and analyze the differences in the transmission of various channels.Firstly,this article analyzes the existing literature on the Fed's monetary policy,capital outflow and transmission channels,by studying the existing theories of monetary policy,this paper proposes that the changes in the Fed's interest rates will have impacts on China's capital outflow,and the influence is transmitted through interest rate channel,exchange rate channel and asset price channel,the characteristics of each channel's transmission are obtained through mechanism analysis.Secondly,analyzing the impacts of changes in the Fed's interest rates on capital flows worldwide and the current state of China's capital outflow,and comparing the outflow status of various projects under the capital outflow structure;Meanwhile,the TVP-VAR model is used to analyze theimpact of the Fed's interest rate changes on China's capital outflow scale and the structure of China's capital outflow.Finally,it proposes corresponding policy recommendations.The empirical results show that:(1)The direction of the Fed's interest rate changes on China's capital outflow scale has the same direction as the Fed's interest rate changes,and the impact is time-varying and continuous.(2)The impact of changes in the Fed's interest rate through channels on China's capital outflow scale is time-varying and structural.Changes in the interest rate of the Federal Reserve will cause the same direction of interest rates in China.At this stage,the role of the interest rate channel in controlling China's capital outflow has increased.Changes in the Fed's interest rate and changes in China's exchange rate is in the opposite direction,the exchange rate channel can effectively alleviate the impact of changes in the Fed's interest rate on China's capital outflow.Changes in the Fed's interest rate will cause China's asset prices to fluctuate in the same direction.In the long run,the use of asset price channel cannot effectively control China's capital outflow.(3)Changes in the Fed's interest rate will have impacts on various projects under capital outflow,and the impact is characterized by structural changes,investment income projects are more sensitive to changes in the Fed's interest rates,while capital and financial items,net errors and missing items are lagging.Finally,in order to reduce the excessive effect on the Chinese capital outflow caused by changes in the Fed's interest rate,this paper proposes countermeasures based on the transmission mechanism of the impact of the changes in the Fed's interest rate on China's capital outflow and the condition of the projects under the Chinese capital outflow due to changes in the Fed's interest rate.The paper has 25 pictures,8 tables,126 references.