Suriani Suriani, Sartiyah Sartiyah, Abd. Jamal, Asri Diana, Sartika Sartika, Yulia Yulia
This study investigates the dynamic relationship between Indonesia's capital market, global crises, and the green transition, with a specific focus on financial decision-making in engineering and infrastructure projects. Using monthly data from 2000 to 2024 and employing a Vector Autoregression (VAR) framework, we analyze the interactions between the Jakarta Composite Index (IHSG), global economic policy uncertainty (GEPU), and renewable energy developments (RENE). The analysis incorporates impulse response functions to capture dynamic reactions and Granger causality tests to assess causal linkages. The empirical results indicate that GEPU and IHSG exhibit a bidirectional causal relationship, suggesting that global uncertainty significantly influences the Indonesian capital market, while stock market movements also have a modest feedback effect on global uncertainty. The analysis shows that the Indonesian capital market responds strongly and persistently to global crisis shocks. In contrast, renewable energy shocks elicit negligible responses, suggesting that the capital market has not yet fully internalized the green transition. The policy implications indicate the importance of strengthening the resilience of engineering and infrastructure projects to global uncertainty and need for greater integration of green finance into Indonesia's capital market to support the green transition. © 2025 IEEE.
Universitas Syiah Kuala (USK), Faculty of Economics and Business, Banda Aceh, Indonesia
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