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

70 Pages Posted: 28 Sep 2013  

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)

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Date Written: September 2013

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.

Suggested Citation

Liebman, Jeffrey B. and Mahoney, Neale, Do Expiring Budgets Lead to Wasteful Year-End Spending? Evidence from Federal Procurement (September 2013). NBER Working Paper No. w19481. Available at SSRN: https://ssrn.com/abstract=2332553

Jeffrey B. Liebman (Contact Author)

Harvard University - Harvard Kennedy School (HKS) ( email )

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HOME PAGE: http://www.jeffreyliebman.com

National Bureau of Economic Research (NBER)

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Neale Mahoney

University of Chicago Booth School of Business ( email )

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United States
773.702.9278 (Phone)

National Bureau of Economic Research (NBER) ( email )

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Cambridge, MA 02138
United States

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