Ardhiani Fadila, Tatang Ary Gumanti, Julia Safitri, Eka Handriani
This study examines the influence of labor force participation and demographic dynamics on government bond yields in Indonesia, focusing on the mediating role of economic growth. Understanding these relationships is essential for maintaining market stability and informing fiscal policy in emerging markets (Pinho & Barradas, 2021). Using quarterly data (2009–2023), this study employs regression, Sobel tests, cointegration, and impulse response analysis to examine effects on one, five, and ten-year bond yields. The findings reveal that while labor participation and demographic shifts do not have direct effects, economic growth significantly mediates their impact on short-term bond yields. The cointegration results confirm the existence of long-term equilibrium relationships across all tenors. Additionally, short-term yields demonstrate higher sensitivity to macroeconomic shocks compared to medium-and long-term yields (Michelson & Stein, 2023). These results highlight the critical role of promoting stable economic growth and managing demographic risks to sustain the performance and competitiveness of government bond markets in developing economies. © 2025 The Authors.
Faculty of Economics and Business, Universitas Pembangunan Nasional Veteran Jakarta (UPN “Veteran” Jakarta), Jakarta, Indonesia; Universitas Katolik Widya Mandala, Surabaya, Indonesia; Universitas Terbuka, Tangerang Selatan, Indonesia; Universitas Darul Ulum Islamic Centre Sudirman, Ungaran, Indonesia; Faculty of Economics and Business, Universitas Terbuka, Tangerang Selatan, Indonesia