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The Treasury's Experiment with Single-Price Auctions in the Mid-1970s: Winner's or Taxpayer's Curse?

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  • Simon, David P

Abstract

This study examines the Treasury's experiment with single-price bond auctions in the mid-1970s and finds that, controlling for factors unrelated to auction technique, markups of auction average rates over when-issued rates shortly after auctions were a statistically significant seven to eight basis points higher at single-price auctions than at discriminating-price auctions. These results suggest that single-price auctions raised Treasury borrowing costs by roughly 3/4 percent of the issuing price of auctioned securities. Copyright 1994 by MIT Press.

Suggested Citation

  • Simon, David P, 1994. "The Treasury's Experiment with Single-Price Auctions in the Mid-1970s: Winner's or Taxpayer's Curse?," The Review of Economics and Statistics, MIT Press, vol. 76(4), pages 754-760, November.
    • Handle: RePEc:tpr:restat:v:76:y:1994:i:4:p:754-60
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    Cited by:

    1. Peyman Khezr & Anne Cumpston, 2022. "A review of multiunit auctions with homogeneous goods," Journal of Economic Surveys, Wiley Blackwell, vol. 36(4), pages 1225-1247, September.
    2. Abbink, Klaus & Brandts, Jordi & Pezanis-Christou, Paul, 2006. "Auctions for government securities: A laboratory comparison of uniform, discriminatory and Spanish designs," Journal of Economic Behavior & Organization, Elsevier, vol. 61(2), pages 284-303, October.
    3. Erwann SbaÏ & Olivier Armantier, 2006. "Estimation and comparison of treasury auction formats when bidders are asymmetric," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(6), pages 745-779.
    4. Deddy Koesrindartoto, 2003. "Treasury Auctions, Uniform or Discriminatory?: An Agent-based Approach," Computing in Economics and Finance 2003 241, Society for Computational Economics.
    5. Raphaële Préget, 2004. "Adjudications des valeurs du Trésor," Revue Française d'Économie, Programme National Persée, vol. 18(4), pages 63-110.
    6. Klenio Barbosa & Dakshina De Silva & Liyu Yang & Hisayuki Yoshimoto, 2019. "Auction Mechanisms and Treasury Revenue," Working Papers 267027285, Lancaster University Management School, Economics Department.
    7. Breedon, Francis, 2018. "On the transactions costs of UK quantitative easing," Journal of Banking & Finance, Elsevier, vol. 88(C), pages 347-356.
    8. Nyborg, Kjell G. & Sundaresan, Suresh, 1996. "Discriminatory versus uniform Treasury auctions: Evidence from when-issued transactions," Journal of Financial Economics, Elsevier, vol. 42(1), pages 63-104, September.
    9. Kondrát, Zsolt, 1996. "Az aukciós módszer hatása a kincstár bevételére [The impact of the auction method on the revenues of the Treasury]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(6), pages 506-524.
    10. Angelo Ranaldo & Dr. Enzo Rossi, 2016. "Uniform-price auctions for Swiss government bonds: Origin and evolution," Economic Studies 2016-10, Swiss National Bank.
    11. Boo‐Sung Kang & Steven L. Puller, 2008. "The Effect Of Auction Format On Efficiency And Revenue In Divisible Goods Auctions: A Test Using Korean Treasury Auctions," Journal of Industrial Economics, Wiley Blackwell, vol. 56(2), pages 290-332, June.
    12. Preget, Raphaele & Waelbroeck, Patrick, 2005. "Treasury bill auction procedures: Empirical perspectives from French market bid functions," Journal of International Money and Finance, Elsevier, vol. 24(7), pages 1054-1072, November.
    13. Olivier Armantier & Nourredine Lafhel, 2009. "Comparison of Auction Formats in Canadian Government Auctions," Staff Working Papers 09-5, Bank of Canada.

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