Economic policy uncertainty and sovereign bond yields: A global perspective
Jessica Paule-Vianez, Sandra Escamilla-Solano, Paola Plaza-Casado, Nawazish Mirza
Keywords:
Economic policy uncertainty, Sovereign bond, Behavioral finance, Yield, Debt market
Abstract:
Recent economic crises, including the global financial crisis, the euro area crisis, and recurring political and trade tensions, have increased interest in the role of psychological and social factors in economic outcomes. In this context, economic policy uncertainty (EPU) has gained attention due to its potential negative effects on economic activity. This paper examines the impact of EPU on 10-year sovereign bond yields. We apply a two-stage least squares (2SLS) panel model to a sample of 20 countries from February 2011 to September 2019. The results show that EPU has a positive and significant effect on sovereign bond yields. When comparing country groups, the effect is positive and statistically significant only in developed economies. These findings suggest that investor insecurity related to EPU affects sovereign bond markets and highlights the importance of reducing policy uncertainty to limit adverse effects on public debt.
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 10.7441/joc.2026.02.10
Paule-Vianez, J., Escamilla-Solano, S., Plaza-Casado, P., & Mirza, N. (2026). Economic policy uncertainty and sovereign bond yields: A global perspective. Journal of Competitiveness 18(2), 263–276. https://doi.org/10.7441/joc.2026.02.10
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