AN ANALYSIS OF BIDDING IN THE JAPANESE GOVERNMENT BOND AUCTIONS

We examine the bidding patterns and auction profits in the Japanese Go vernment Bond (JGB) auctions and empirically test the predictions of a uction theory. We find that the average profit in JGB auctions is not reliably different from zero, and the degree of competition and the le vel of uncertainty are insignificant in determining auction profits. T he winning shares of the U.S. dealers are positively related to auctio n profits, whereas the winning shares of their Japanese counterparts s how a negative association. We also find that the share of winnings of Japanese dealers tends to be correlated with the share of winnings of their compatriot dealers but a similar relation is not found for U.S. dealers.