The Defensive Strategy Research Of Chinaand Usa’s Monetary Policy

With the development of economic integration, policy spillover effect becomes moresignificant, prompting monetary policy interaction attract much attention. From2003to2012, the monetary policy interaction between USA and China changed from tightsynchronously to loose one by one and to parted ways finally, presenting obviouslyperiodic interactive features: from coordination to leader-follower and to defense, givingan excellent case for the choice of China’s monetary policy in new stage. Considering itsimportance, this paper analyzed the monetary policy interaction in recent ten years, derivedthe theoretical model, compared the policy effects, and indicated the selection and directionof China’s monetary policy, which are both very important in theory and practice.By studying the related literature, this paper started from the concept of monetarypolicy interaction, combed the history of interaction from origin to depth, and analyzedmonetary policy’s transmission channels, laying a firm theoretical foundation for furtherresearch. Then, this paper studied the detailed spillover effects and interactive patterns ofmonetary policy between China and USA with theoretical and empirical analysis methods.Firstly, this paper summarized the macro-economic fluctuation and monetary policyadjustment process, analyzed the spillover effects and did SVAR empirical test, indicatingthe existence of policy spillover effect and its influences; Then, given the periodicinteractive features and the differences of policy effect, this paper divided the interactivestage, derived the theoretical model and compared China’s policy effects under differentpatterns.On the basis of the above research, this paper combined with the background of sloweconomic recovery abroad and hard structure transformation at home, concluding thatChina should choose defensive monetary policy nowadays, and choose coordinative policyin the long-term. This paper also stress that, China should strengthen the counter-cyclicalmonetary policy to iron economic fluctuation, and improve its policy transmission channels,policy collocation, and policy coordination system.