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

Liebman, Jeffrey B.; Mahoney, Neale

doi:10.2139/ssrn.2331246

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

69 Pages Posted: 27 Sep 2013 Last revised: 18 Sep 2017

See all articles by Jeffrey B. Liebman

Jeffrey B. Liebman

Harvard University - Harvard Kennedy School (HKS); National Bureau of Economic Research (NBER)

Neale Mahoney

University of Chicago Booth School of Business; National Bureau of Economic Research (NBER)

There are 2 versions of this paper

Date Written: March 5, 2016

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 U.S. 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.

Keywords: year-end spending, government budgeting, procurement

JEL Classification: H0, H5, H56, H57, H61, L0, L2, L24

Suggested Citation: Suggested Citation

Liebman, Jeffrey B. and Mahoney, Neale, Do Expiring Budgets Lead to Wasteful Year-End Spending? Evidence from Federal Procurement (March 5, 2016). Available at SSRN: https://ssrn.com/abstract=2331246 or http://dx.doi.org/10.2139/ssrn.2331246