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

Do Expiring Budgets Lead to Wasteful Year-End Spending? Evidence from Federal Procurement† AbstractMany 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 H57, H61) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Review American Economic Association

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

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Publisher
American Economic Association
Copyright
Copyright © 2017 © American Economic Association
ISSN
0002-8282
D.O.I.
10.1257/aer.20131296
Publisher site
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Abstract

AbstractMany 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 H57, H61)

Journal

American Economic ReviewAmerican Economic Association

Published: Nov 1, 2017

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