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Do Expiring Budgets Lead to Wasteful Year-End Spending? Evidence from Federal Procurement

Jeffrey B. Liebman and Neale Mahoney

American Economic Review, 2017, vol. 107, issue 11, 3510-49

Abstract: Many organizations have budgets that expire at the end of the fiscal year and may face incentives to rush to spend resources on low-quality projects at year's end. We test these predictions using data on procurement spending by the US federal government. Spending in the last week of the year is 4.9 times higher than the rest-of-the-year weekly average, and year-end information technology projects have substantially lower quality ratings. We also analyze the gains from allowing agencies to roll over unused funds into the next fiscal year.

JEL-codes: H57 H61 (search for similar items in EconPapers)
Date: 2017
Note: DOI: 10.1257/aer.20131296
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Handle: RePEc:aea:aecrev:v:107:y:2017:i:11:p:3510-49