Auction Mechanisms and Treasury Revenue: Evidence from the Chinese Experiment

This paper exploits a large-size auction experiment conducted by two Chinese Government Treasury security issuers---the Chinese Development Bank and the Export-Import Bank---to investigate whether Treasury securities should be sold through uniform or discriminatory auction mechanisms. Based on the outcomes of more than 300 Treasury securities issued through an alternating auction-rule market experiment, we find that yield rates of the two auction formats are not statistically different. Further, these estimates indicate that there is no significant economic difference in terms of revenue between the two auction mechanisms. This result is robust across different bond-yield rate measurements and participation behavior.

Keywords: Treasury Security Auctions; Discriminatory Auctions; Uniform Auctions; Revenue Equivalence

JEL Classification: C57, C58, D44

Suggested Citation: Suggested Citation

Barbosa, Klenio and De Silva, Dakshina G. and Yang, Liyu and Yoshimoto, Hisayuki, Auction Mechanisms and Treasury Revenue: Evidence from the Chinese Experiment (February 21, 2021). Available at SSRN: https://ssrn.com/abstract=3404370 or http://dx.doi.org/10.2139/ssrn.3404370