| Abstract | In this paper, by constructing a model of "asset allocation crowding and squeezing" with quantitative easing policy, we effectively explains that the quantitative easing (QE) policy of the United States affects the domestic prices of commodities by influencing the investment market, which may finally lead to the pressure of imported inflation. Based on the theoretical assumptions, this paper first uses the real sales price data of the monthly market of the National Development and Reform Commission Price Monitoring Center, and uses the Propensity Score Matching method (PSM) and the Difference-in-Difference method (DID) to select 65 major commodities monthly market Price. On the one hand by distinguishing the price sensitivity of products with different degrees on the quantitative easing policy, we effectively test the influence of the US quantitative easing policy on China's commodity prices; on the other hand, through different types of commodity differential response, we effectively reveal that the government's price regulation provides blocking effect on the imported inflation caused by the US quantitative easing policy, verifying the effectiveness of the government's price regulation. Specifically, the impact of the first two rounds of quantitative easing in the United States on commodity prices is dominated by the investment "crowded" effect, and through the spillover effect, raise some commodity prices that are not regulated by government. And we also confirmed that commodity prices regulated by government remained stable and were not affected by US QE policies. Therefore, China's market price regulation mechanism effectively alleviates the pressure of this imported inflation, and ultimately maintains the stability of the domestic commodity prices. |