The Study On The Transmission Mechanism Of U.S. Quantitative Easing Monetary Policy Impacting On China’s Economy

After the financial crisis, the United States took the quantitative easing monetary policy which had a profound impact on world economic development. The article has been studied from theoretical and practical aspects of international transmission mechanism of U.S. monetary policy to China. This article begins with open macroeconomic model to analyze the international transmission of monetary policy pathway, and then describes the evolution of U.S. monetary policy in order to explain how it transmit to China. The article tries to detect the impact on our economy from U.S. quantitative easing monetary policy in a practical point of view which includes the Granger non-causality test, VAR, the impulse response function methodology. The empirical study found that U.S. monetary policy through three mechanisms, which is trade transmission mechanism, relative price transmission mechanism and capital market transmission mechanism, significantly affect China’s domestic economic operation. The changes in U.S. exchange rates and interest rate have the most obvious impact on China economy which we should pay more attentions. At the end of the article, author comes up with some suggestions combining with empirical research results.