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

Liebman, J. B., & Mahoney, N. (2017). Do Expiring Budgets Lead to Wasteful Year-End Spending? Evidence from Federal Procurement. American Economic Review, 107(11), 3510-3549.

Type

Journal article

Intellectual base

Primary research

Year

2017

Volume

107

Issue

11

Pages

3510-3549

DOI

10.1257/aer.20131296

DOI registrant

American Economic Association

Link

https://pubs.aeaweb.org/doi/abs/10.1257/aer.20131296

Cited from

economics_finance

Cited by

3 citations across 3 artifacts.

Each citation links to the sentence it supports in the citing article.

Primes

• Parkinson's Law
  • In government program budgeting, use-it-or-lose-it rules guarantee year-end spending bursts to consume unused allocation.

    This sourceDocuments a year-end spending surge under use-it-or-lose-it federal appropriations (last-week spending 4.9x the weekly average) with lower-quality year-end IT projects.

    Supported in partVerified against the publisher's abstract

    The abstract documents a 4.9x last-week spending surge under expiring federal budgets, supporting the year-end burst but not a literal 'guarantee'.

    “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 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 …”

    Read by an automated reader; not a human review. How support was checked

Mechanisms

• Budget Ceiling with Returned-Funds Path
  • Its strength is that it attacks use-it-or-lose-it spending directly — the archetype's signature failure — by removing the penalty that makes a ceiling behave like a floor.

    This sourceShows how expiring budgets create use-it-or-lose-it spending incentives and models rollover authority as removing the binding year-end spending constraint.

• Budget Cycle
  • And an expire-at-close rule produces the classic fiscal-year-end spending surge, where money is burned in the final weeks to protect a baseline rather than to buy value.

Verification

Does it exist? Confirmed. This work's DOI resolves to a registered record, which fixes its identity. That is all it fixes.

Does it back the claim? Read against the text for 1 of 3 citations: 1 supported in part. Each verdict is shown under its citation below, with what in the work backs the sentence.

Support is checked per citation rather than per work — the same source can be cited soundly in one article and wrongly in another. Per-citation recording began recently, so a citation with no recorded check is a gap in the record rather than evidence it went unchecked.

See how references were verified.

Links previously used in the corpus

Before the registry existed this work was also linked 1 other way.

• https://doi.org/10.1257/aer.20131296 ×3

Registry ID ref:8b0e22f9daca · see in the full table