NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

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

Jeffrey B. Liebman, Neale Mahoney

NBER Working Paper No. 19481
Issued in September 2013, Revised in January 2018
NBER Program(s):Public Economics

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.

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Document Object Identifier (DOI): 10.3386/w19481

Published: Jeffrey B. Liebman & Neale Mahoney, 2017. "Do Expiring Budgets Lead to Wasteful Year-End Spending? Evidence from Federal Procurement," American Economic Review, vol 107(11), pages 3510-3549.

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