Research On The Theory And Practice Of The Quantity Easing Policy

The Quantity Easing Policy (QEP) is firstly practiced by Bank of Japan in Mar.2001, and it is thought to be the sole effective monetary policy operation in the lately unprecedented financial crises. Faced with the constraints of Zero Interest Policy and the inefficiency of the traditional easing monetary policy, the United States led major countries into the Quantity Easing Policy.This Paper tries to conduct a systematic research on the Quantity Easing Policy from the perspective of the theory analysis and practice analysis, the history dimension and the reality dimension. The first section is a brief introduction of the QEP. The second section is the theory about the QEP, which analyzes the common operational modes, the difference between QEP and the traditional easing monetary policy, and the transmit mechanism of the QEP. This section emphasis on the mechanism, which shows the way the QEP influences on the financial market and the economy. The third section turns to comparative analyses on different countries'practice of QEP. The are four central banks which conduct the QEP, the Federal Reserve System, Bank of Japan, Bank of England, and European Central Bank. The analyses concentrate on the operation of policy, the policy impact on the financial markets and economy and etc. The fourth and fifth section is a summary of the QEP's influences and some further thoughts about the QEPThe paper draws conclusions as follows. Firstly, the QEP targets on the stability of the financial system and focuses on multidimensional economic variables. There are transmission mechanisms as follows:interest transmission channel under low interest expectation, relative price transmission channel, weak asset and liability transmission channel and etc. Secondly, the QEP is absolutely necessary to get rid of the crisis. It functions as follows:creating an easing environment for global economy, leading the low interest expectation, shaping the faith and stabilizing the financial system, easing the deflation and start up the recovery of the economy. Thirdly, the QEP is not absolutely effective and leads to new risks. The main problem are:the QEP didn't repair the financing function of credit market, the effects of is constrained by macro and micro factors, the long term inflation expectation and contraction of the QEP will leads to a new round of crises.