28 Jul
2025
Kiel-CEPR Research Seminar
How to Sell Public Debt in Uncertain Times
12:00
–
13:00
Daniel Neuhann, McCombs School of Business at UT Austin
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Registration
Speaker: Daniel Neuhann, McCombs School of Business at UT Austin
Location: online or at Kiel Institute for the World Economy, Chausseestraße 111, 10115 Berlin
Organizers: Kiel Institute for the World Economy, CEPR
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Abstract: How should governments structure primary sovereign bond markets when investors face asymmetric uncertainty about default risk and total demand? Standard protocols either use uniform prices for all investors, or price discriminate based on bid prices (“pay as bid”). Uniform pricing encourages more bidding by uninformed in-vestors but price discrimination captures inframarginal surplus. Based on this trade-off, we propose a protocol that features price discrimination on inframarginal bids and uniform pricing on marginal bids, thereby reducing the mean and variance of public borrowing costs. We also offer new evidence on the information content of primary bond markets which supports our framework.
Paulina Kintzinger
Paulina.Kintzinger@ifw-kiel.de
Timothy Meyer
Timothy.Meyer@ifw-kiel.de
