The Effectiveness Of Japan’s Quantitative Easing Monetary Policy And The Enlightenment For China To Implementing Monetary Policy

Since the 2008 global financial crisis spread in the global, Major economies which include Japan and the United States have been affected by the economy and caught in this deflation. In order to solve the problem of deflation in their country, They have implemented quantitative easing policy. Central banks around the world through cut interest rates, Maintain short-term interest rates close to zero, Purchase long-term bonds and other ways to inject a lot of liquidity into the market, Thus, Developed countries entered into Quantitative Easing Age. Quantitative easing monetary policy which is put forward by economist and policy makers from the United States, Japan and other countries is for "liquidity trap" and other issues. Quantitative easing monetary policy is the policy that central bank purchase treasury bonds, In order to inject liquidity to the market and stimulate the national economy, When the conventional monetary policy is invalid, Methods of quantitative easing monetary policy are mainly included policy commitments, Change the central bank balance sheet structure and the expansion of the central bank balance sheet size and so on. Its policy objectives including overcome the deflation, Stabilize the price level, Restore the credit system function, Maintain the stability of financial system, Stimulate investment and consumption, Restore economic growth.As an important unconventional monetary policy, Main global developed economies such as American, Japan has taken quantitative easing monetary policy while Japan, As the birthland of quantitative easing monetary policy, Certainly has some experience for reference. Though there are many disputes about the effect of this policy, It is still meaningful for our further research.In order to improve the economic downturn after Japan’s bubble economy burst, The bank of Japan began implementing the low interest rate policy since 1991. In early 1999, Japan’s interest rate has dropped to zero, So Japan implements quantitative easing monetary policy. The implementation of this policy has played a positive role for Japanese economy. In 2000, Global economic situation has been affected by the United States Internet bubble burst, The Japanese are no exception. The conventional monetary policy is invalid, Because Japan’s market interest rate has dropped to zero. So Japan began to implement this policy. This policy is very meaningful for Japanese economy, Japan’s economy has been out of the haze of deflation.In 2008, Financial crisis broke on the world, It’s has a bad effect on Japan’s economy. So, Japan began to implement this policy once again. After Abe took office in 2012, A series of policy was put forward. This article will introduce this policy which is put forward by Japan, And analysis the effectiveness of this policy. At last, This article will introduce the enlightenment for China to implementing monetary policy.This paper has five parts:The first part is this paper’s research background, the research content and research methods, And finally I will introduce this paper’s innovation and shortcomings. The second part introduces the definition of quantitative easing monetary policy, And the difference between traditional monetary policy, And other aspects of the relevant concepts, And then introduces the quantitative easing monetary policy theory. The third part mainly introduces Japan twice policy practice. This part introduces the background, Main contents and the effect of implementation of Japan’s two rounds of quantitative easing monetary policy. The fourth part is the empirical research section, This paper uses VAR method to analysis the availability of Japan’s quantitative easing monetary policy. The fifth part is the conclusion of this paper and the enlightenment to China’s monetary policy. Through theoretical and empirical analysis, This paper draws the conclusion of this paper, And then put forward some suggestions for our country according to the implementation of this policy in Japan.Through the theoretical and empirical analysis, This paper get the following conclusion:This policy is effective for Japan, Because It has overcome deflation. But, On other aspects, Its effect is not obvious. If it is used solely, The effect of quantitative easing monetary policy is not effective. If it is used with other policies, It will have important effect on Japanese economy.