Degree Name

Doctor of Philosophy


School of Business


This thesis consists of three self-contained empirical research papers on the effects of macroeconomic shocks. The focus of the first paper is on the monetary policy transmission in Sri Lanka, a country whose monetary policy underwent transformation during and following a three-decade-long ethnic conflict. Consequently, the first paper empirically explores the effects of monetary policy shocks on the Sri Lankan economy. It places particular emphasis on the strength of the credit and exchange rate channels, employing a Vector Autoregression (VAR) model spanning the years 2003 to 2019. The empirical findings can be summarized as follows: (i) Monetary policy shocks exert a substantial and persistent impact on key macroeconomic variables, although several puzzling results emerge; (ii) The influence of monetary policy shocks is pronounced and more persistent in the post-conflict period compared to the conflict period; (iii) In the post-conflict period, a tight monetary policy effectively curbs inflation; and (iv) The interest rate and exchange rate channels play a dominant role, while the credit channel exhibits a delayed response in the post-conflict era.

The second paper explores the international effects of China’s economic and trade policy uncertainty shocks. Uncertainty originating from large economies has been shown to spillover to the rest of the world. However, there is a lack of understanding of the cross-border effects of China’s policy uncertainty shocks. Using panel VAR models, this paper investigates the contagion effects of China’s economic and trade policy uncertainty shocks on macroeconomic and financial variables in 26 advanced and emerging market economies. The empirical results indicate that China’s policy uncertainty shocks lead to a decline in output, exports, imports, net exports, stock prices, and the value of the domestic currency in both advanced and emerging economies. Notably, both economic and trade policy uncertainty shocks have similar adverse effects. Importantly, China’s uncertainty significantly contracts the trade flow in both advanced and emerging economies. The adverse spillover effects on emerging economies are more prominent and persistent than those on advanced economies. Moreover, the effects are more severe across the countries in the Belt and Road initiative and commodity-exporting economies. This heterogeneity in responses can be attributed to countries’ trade link with China and their degree of dependence on commodity export.

The third paper examines the impact of technology shocks originating from the US on 11 emerging market economies from 1996 to 2018. Using a structural VAR and proxy-instrumental variable, this study shows that the US technology shocks generate cross-border effects and business cycle co-movements across emerging market economies. These shocks have positive spillover effects on key macroeconomic variables, such as real gross domestic product, investment, consumption, net exports and net FDI. Moreover, due to the technology shocks, there is a persistent exchange rate depreciation and strong stock market performance in emerging economies. Interestingly, the non-investment-specific technology shocks generate a more substantial cross-border impact than the investment-specific technology shocks. The panel local projection model and country-specific VAR model also yield similar results.

FoR codes (2008)


This thesis is unavailable until Thursday, November 06, 2025



Unless otherwise indicated, the views expressed in this thesis are those of the author and do not necessarily represent the views of the University of Wollongong.