The Economics of Treasury Securities Markets

Abstract
The market for Treasury securities attracted considerable attention recently, after alleged infringements by Salomon Brothers. Several questions have been raised about the best way of selling U.S. government debt. One issue is whether altering the auction format would yield greater revenues for the Treasury. Another related question is how susceptible the existing mechanism for selling Treasury securities is to manipulation by buyers. In this paper, we describe what economists' analyses of auctions imply about the market for Treasury securities.

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