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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. Fitzenberger, Bernd & Furdas, Marina & Sajons, Christoph, 2016. "End-of-year spending and the long-run employment effects of training programs for the unemployed," Freiburg Discussion Papers on Constitutional Economics 16/08, Walter Eucken Institut e.V..
    2. 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.
    3. 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.
    4. Glenn W. Harrison & Morten I. Lau & Melonie B. Williams, 2002. "Estimating Individual Discount Rates in Denmark: A Field Experiment," American Economic Review, American Economic Association, vol. 92(5), pages 1606-1617, December.
    5. 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.
    6. 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.
    7. 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.
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    Cited by:

    1. Marcus Matthias Keupp, 2021. "Institutions and Armed Forces," Springer Books, in: Defense Economics, chapter 0, pages 23-65, Springer.
    2. Jordi Rosell, 2023. "Green Public Procurement in Spain," Hacienda Pública Española / Review of Public Economics, IEF, vol. 245(1), pages 95-117, June.
    3. 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.
    4. 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.
    5. Siemroth, Christoph, 2022. "Ending Wasteful Year-End Spending: On Optimal Budget Rules in Organizations," Economics Discussion Papers 32231, University of Essex, Department of Economics.
    6. 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.

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