Global spillover effects: Indonesia’s stock market response to U.S. monetary policy shifts

Septiana, Yuvi Putri and Retnasih, Nora Ria ORCID: https://orcid.org/0000-0001-5915-8871 (2025) Global spillover effects: Indonesia’s stock market response to U.S. monetary policy shifts. Asian Journal of Economics, Business and Accounting, 25 (12). pp. 220-238. ISSN 2456-639X

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Abstract

Global economic developments, especially monetary policy in the United States (US), have a significant impact on the Indonesian economy. Shifts in US monetary policy can trigger changes in macroeconomic conditions and the dynamics of the Indonesian capital market, both conventional and sharia. This study aims to analyze how changes in US monetary policy affect the Indonesian economy and how US stock market movements impact the domestic stock market. Using the Structural Vector Autoregression (SVAR) model, this study finds that changes in US monetary policy have a substantial long-term effect on Indonesia's economic stability. In addition, Indonesia's conventional and Sharia stock indices show a high dependence on the movement of the US stock index, which acts as the main reference in the global financial market. These findings underscore the importance of risk mitigation strategies for investors and policymakers in dealing with global market dynamics.

Item Type:	Journal Article
Keywords:	monetary policy; higher for longer; DJI; DJIM; IDX composite; JII
Subjects:	14 ECONOMICS > 1401 Economic Theory > 140102 Macroeconomic Theory 14 ECONOMICS > 1403 Econometrics > 140305 Time-Series Analysis 14 ECONOMICS > 1401 Economic Theory 14 ECONOMICS > 1403 Econometrics
Divisions:	Faculty of Economics > Department of Management
Depositing User:	Nora Ria Retnasih
Date Deposited:	10 Jul 2026 15:34

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