Global Spillover Effects: Indonesia’s Stock Market Response to U.S. Monetary Policy Shifts
Yuvi Putri Septiana, Nora Ria Retnasih
Asian Journal of Economics, Business and Accounting · pp. 220–238 · Published 2 Dec 2025
10.9734/ajeba/2025/v25i122087Abstract
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.
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