Auction Mechanisms and Treasury Revenue: Evidence from the Chinese Experiment

55 Pages Posted: 20 Jun 2019 Last revised: 22 Feb 2021

See all articles by Klenio Barbosa

Klenio Barbosa

SKEMA Business School

Dakshina G. De Silva

Department of Economics, Lancaster University Management School

Liyu Yang

Department of Economics, Lancaster University Management School

Hisayuki Yoshimoto

University of Glasgow, Business School, Economics

Date Written: February 21, 2021

Abstract

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

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

Klenio Barbosa

SKEMA Business School

60, rue Fedor Dostoïevski
Sophia Antipolis, Alpes-Maritimes 06600
France

Dakshina G. De Silva (Contact Author)

Department of Economics, Lancaster University Management School ( email )

Lancaster LA1 4YX
United Kingdom

Liyu Yang

Department of Economics, Lancaster University Management School ( email )

United Kingdom
07719714803 (Phone)

Hisayuki Yoshimoto

University of Glasgow, Business School, Economics ( email )

Glasgow
United Kingdom

HOME PAGE: http://hisayukiyoshimoto.org/

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