The study of American quantitative easing monetary policy's spillover effects on China inflation

Abstract

After the outbreak of the financial crisis in 2008, the United States began quantitative easing monetary policy, different from traditional policy, which has aroused many countries' opposition and concerns. At the same time, China has experienced a sustained inflation. Whether is there some connection between QE and China's inflation? Whether has quantitative easing monetary policy caused a large scale of international market liquidity significantly? The paper analyzes the transmission channels of quantitative easing monetary policy to China's inflation, and takes cointegration test of economic variables by using data from November 2009 to August 2012.It finds that U.S. quantitative easing monetary policy induces China inflation through international commodity prices, international capital flowing and balance of payments.