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Putting It Off for Later: Procrastination and End of Fiscal Year Spending Spikes

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  • Stuart Baumann

Abstract

Many governments around the world exhibit heightened spending at the end of the fiscal year. These end of fiscal year spending spikes often concern policy makers due to their tendency to result in lower quality spending. This paper uses UK data to offer evidence against the precautionary savings explanation for spending spikes. An alternative explanation is offered with procrastination driving heightened end of fiscal year spending. A new technique of time‐variant budgetary taxes is calibrated to the model, and it is shown to be effective for smoothing spending and improving spending efficiency throughout the fiscal year.

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  • Stuart Baumann, 2019. "Putting It Off for Later: Procrastination and End of Fiscal Year Spending Spikes," Scandinavian Journal of Economics, Wiley Blackwell, vol. 121(2), pages 706-735, April.
    • Handle: RePEc:bla:scandj:v:121:y:2019:i:2:p:706-735
    DOI: 10.1111/sjoe.12287
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    References listed on IDEAS

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    1. Jeffrey B. Liebman & Neale Mahoney, 2013. "Do Expiring Budgets Lead to Wasteful Year-End Spending? Evidence from Federal Procurement," NBER Working Papers 19481, National Bureau of Economic Research, Inc.
    2. Fitzenberger, Bernd & Furdas, Marina & Sajons, Christoph, 2016. "End-of-year spending and the long-run employment effects of training programs for the unemployed," ZEW Discussion Papers 16-084, ZEW - Leibniz Centre for European Economic Research.
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    4. Drazen Prelec, 2004. "Decreasing Impatience: A Criterion for Non‐stationary Time Preference and “Hyperbolic” Discounting," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(3), pages 511-532, October.
    5. Michael D. Frakes & Melissa F. Wasserman, 2016. "Procrastination in the Workplace: Evidence from the U.S. Patent Office," NBER Working Papers 22987, National Bureau of Economic Research, Inc.
    6. Saul Pleeter & John T. Warner, 2001. "The Personal Discount Rate: Evidence from Military Downsizing Programs," American Economic Review, American Economic Association, vol. 91(1), pages 33-53, March.
    7. W.J. Hurley & Jack Brimberg & Brent Fisher, 2014. "Use it or lose it: On the incentives to spend annual defence operating budgets," Defence and Peace Economics, Taylor & Francis Journals, vol. 25(4), pages 401-413, August.
    8. David Laibson, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(2), pages 443-478.
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    Cited by:

    1. Jordi Rosell, 2023. "Green Public Procurement in Spain," Hacienda Pública Española / Review of Public Economics, IEF, vol. 245(1), pages 95-117, June.
    2. Margaryta Klymak & Stuart Baumann, 2022. "Paying over the odds at the end of the fiscal year. Evidence from Ukraine," Economics Series Working Papers 968, University of Oxford, Department of Economics.
    3. Christoph Siemroth, 2024. "Ending Wasteful Year‐End Spending: On Optimal Budget Rules In Organizations," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 65(3), pages 1163-1188, August.
    4. Stuart Baumann & Margaryta Klymak, 2022. "Do governments crowd out governments? Evidence from embassies at fiscal year-end," Economics Series Working Papers 988, University of Oxford, Department of Economics.
    5. Marcus Matthias Keupp, 2021. "Institutions and Armed Forces," Springer Books, in: Defense Economics, chapter 0, pages 23-65, Springer.
    6. Christoph Siemroth, 2022. "Dezemberfieber senken: Vermeidung von verschwenderischen Jahresendausgaben [Reducing “Dezemberfieber”: Wasteful Year-End Spending and a Solution]," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 102(6), pages 461-464, June.

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