Comparative Analysis of the Impact of Quantitative Easing on the United States and Japan

Abstract

Quantitative easing is a nonconventional expansionary policy that has been used in times of economic downturns. It has significantly impacted different economies in the past. In these past years, Covid-19 has had a huge influence over the world and negatively affected the economy, it has brought society’s attention to quantitative easing as a solution to recession. This article uses a comparative analysis of historical data (federal funds rate, bank balance sheet, etc) to analyze the impact of past quantitative easing on the economy in the US and Japan. The result is that in both economies, past QE is effective in helping the economy recover in a short time. The reason behind the policy-making decision and the result of quantitative easing in the US and Japan is very similar, the strategy while implementing quantitative easing is also identical. Proving that QE has a similar impact on the US and Japan’s economic system. This indicates that in the future other countries can take into consideration of QE’s effect on the US and Japan when making economic decisions.