The Impact of Loose Monetary Policies in China and the United States on enterprise investment

Abstract

In response to the economic impact brought about by the COVID-19 pandemic, the two major countries, China and the United States, have respectively adopted relatively loose monetary policies. This paper mainly adopts the differin-differences model to evaluate the impact of loose monetary policies on the changes in the investment levels of enterprises in the two countries under the background of economic shocks. By comparing the impact of the loose monetary policies of China and the United States on the investment level of enterprises, the research shows that due to the differences in national conditions and policies between China and the United States, the loose monetary policy of the United States mainly affects the capital expenditure of large enterprises. China's loose monetary policy has also significantly affected corporate investment, but its effects vary in terms of different enterprise scales, geographical locations and equity natures. Further analysis reveals that China's loose monetary policy has been more effective in promoting investment by small and medium-sized enterprises, enterprises in the eastern region and state-owned enterprises. China's loose monetary policy still needs to be further improved in the future to ensure the stable development of the national economy.