Auction Mechanisms and Treasury Revenue: Evidence from the Chinese Experiment
55 Pages Posted: 20 Jun 2019 Last revised: 22 Feb 2021
Date Written: February 21, 2021
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