Putting It Off for Later: Procrastination and End of Fiscal Year Spending Spikes

Stuart Baumann

Scandinavian Journal of Economics, 2019, vol. 121, issue 2, 706-735

Abstract: Many governments around the world exhibit heightened spending at the end of the fiscal year. These end of fiscal year spending spikes often concern policy makers due to their tendency to result in lower quality spending. This paper uses UK data to offer evidence against the precautionary savings explanation for spending spikes. An alternative explanation is offered with procrastination driving heightened end of fiscal year spending. A new technique of time‐variant budgetary taxes is calibrated to the model, and it is shown to be effective for smoothing spending and improving spending efficiency throughout the fiscal year.

Date: 2019
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https://doi.org/10.1111/sjoe.12287

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