The Repository @ St. Cloud State

Open Access Knowledge and Scholarship

Date of Award


Culminating Project Type




Degree Name

Applied Economics: M.S.




School of Public Affairs

First Advisor

Zhengyang Robin Chen

Second Advisor

Mana Komai Molle

Third Advisor

Kenneth Rebeck

Creative Commons License

Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Keywords and Subject Headings

Fiscal Policy Shock, Industrial Production Shock, Personal Consumption Shock, Monetary Policy Shock, SVAR, ARDL, Cholesky Identification


Many governments across the globe are considering adopting fiscal stimulants on a never-before-seen scale to fight economic recessions in the last ten years due to the development of debt and deficits in industrialized nations. A country's efforts to preserve economic stability are complicated by external economic shocks that can significantly influence the domestic economy through a monetary choice of decision and other links. Our analysis includes two interconnected stages. The first is SVAR analysis for the US economy, while the other investigates the international spillover of those shocks originating from the US. In the first stage, I adopt a Structural VAR to summarize the US economic activities and macroeconomic policy decisions. Then I consider a Cholesky recursive identification strategy to extract the exogenous structural shocks in the US, such as the fiscal shock, the IS shock, the aggregate supply shock, and the monetary policy shock. Our particular concern is the fiscal shocks, which indicate the discretionary fiscal actions taken by the US government. In the second stage, we evaluate the spillover effect of the US fiscal shocks on the monetary policy decisions of OECD countries. For each country, the ARDL model assesses the dynamic impact of one unit of US fiscal shock on the policy interest rate. We find that the rich OECD countries tend to implement expansionary monetary policies confronting a fiscal stimulus shock identified in the US. In comparison, other OECD countries are more likely to have contractionary monetary policy, facing the same fiscal shock.


I want to express my sincere gratitude to my advisor, Dr. Zhengyang Robin Chen, for their invaluable guidance, support, and encouragement throughout my academic journey. Their expertise and dedication have shaped my research and academic pursuits.

I would also like to thank my committee members, Professor Mana Komai and Professor Kenneth Rebeck, for their insightful feedback and contributions to my thesis/dissertation. Their expertise and critical evaluation have helped refine my work and research skills.

Thank you all for your unwavering support and mentorship. Your guidance has been instrumental in shaping my academic success.