Direct Impact of U.S. Monetary Policy Adjustments on International Monetary Policy

From the perspective of global development practice, the rise of Keynesianism after the Great Depression of the 1930s gave prominence to aggregate demand management policies and underscored government intervention in the macroeconomy. As a result, over a long time, governments preferred fiscal policy, and finally there was a global stagflation crisis in the 1970s. After the stagflation of the 1970s, monetarism gained popularity and the monetarist school of thought emerged in theoretical circles. Theoretically, both monetarism and new Keynesianism emphasized regulating the macroeconomy by monetary policy, so governments also preferred monetary policy. Since the 1980s, there has been no revolutionary progress in macroeconomics, making it difficult to meet the challenges posed by new situations. In particular, the prevalence of monetarism seems to be closely related to the current global financial crisis. Obviously, the outbreak of the global financial and economic crisis triggered by the subprime mortgage crisis in the United States in 2007 inevitably calls for new macroeconomic theories.