The Study Of The Spillover Effects Of Quantitative Easing Monetary Policy From The European Union On China

With the deepening of economic globalization, trade and economic ties betweencountries continue to strengthen, the world economy also lurk many instability factors.Under the condition of open economy, the capital of the free flow of trade expandsunceasingly rich makes route of transmission of financial risks is more direct.Originating in the United States subprime crisis of2007, through a series oftransmission, the crisis quickly spread to every corner of the world, and graduallydeveloped into a global economic crisis. Affected by the crisis, many countries in themire of the crisis, policy makers face serious problems such as collapse of thedomestic credit financial system, the miss of market confidence and the liquidityshortage. At that time, developed economies such as Europe and the United States,domestic interest rates have fallen below1%, and hover near zero for a long time, thetraditional monetary policy has no space, so to cope with the increasingly deepeningof the economic crisis, the European Union, Japan has to restart quantitative easingmonetary policy operation, trying to save national economy in the winter. On august9,2007, the European central bank announced that they would provide in accordancewith the4%of the level of official interest rates for the euro zone’s commercial Banksto provide unlimited liquidity overnight funds. Since the European Union continues tocarry on the quantitative easing monetary policy operation, as the economy graduallyrecovering, the European Union plans to exit the operation of the quantitative easing,but the outbreak of European debt crisis of quantitative easing in the temporary exitafter restart. The quantitative easing monetary policy makes the supply of liquidity inthe market increase rapidly, but also release the spillover effects to the world as aresult, China will also be affected. The spillover effect of overflow channel directionimpact problems are worth probing. At the same time, facing the world’s majoreconomies frequent monetary policy operation, as well as the impact of the worldeconomic crisis, how to effectively setting monetary policy in our country to cope with the effects of the external spillover effect are problems to be solved.Based on the theoretical foundation of the monetary policy transmission, thearticle mainly analyzes the quantitative easing monetary policy to our country thespillover effects. By means of econometric models,we focus on the European Unionexpansionary monetary policy actions on the entity economy to quantify the impactdirection influence degree on time. And trying to give reasonable suggestions in orderto make our country in central Europe trade policy dispute have powerful support. Atthe same time providing reasonable suggestions for our country to respond effectivelyto the quantitative easing monetary policy spillover effects. Based on the combing ofrelated literature at home and abroad, we sum up the meaning of the quantitativeeasing monetary policy implementation effect tools and related theories. Further,summarizing the theoretical analysis of the concept of the spillover effects ofmonetary policy transmission channels to varieties, we expound the European Unionmonetary banking system and the implementation process of quantitative easingmonetary policy. The fourth part of the article makes empirical analysis of thespillover effect with the SVAR model. This paper construct the structure of the vectorautoregression model which contains six variables. We select the GDP in China, netexports to Europe, reserves of crude oil and refined oil imports rates as the role ofquantitative easing monetary policy variables. After the test of the smoothness,cointegration relationship, the cause and effect relationship of the model’s time series,we build a stable SVAR (6) model. Through the analysis of impulse response functionand variance decomposition, we conclude that, the quantitative easing monetarypolicy implementation indeed has a significant spillover effect to our country, throughvarious channels of communication, the overflow effect eventually have a negativeimpact to our country economy.According to the empirical results this paper argues that monetary authoritiesshould pay attention to the quantitative easing monetary policy to our country, theinfluence of operation and take various measures to reduce its impact on our country’seconomy. In the future, our country should strengthen the autonomy of monetarypolicy, pay close attention to international capital flows, implement flexible foreign exchange management mode, raise the level of diversification in export industries,strengthen the international coordination of monetary policy.