Efficiency at a Cost: How a Fiscal Rule on Disbursement Timelines Shifted Public Investment Toward Repairs

This paper examines how a time-based fiscal rule reshapes administrative behavior in public investment implementation. We study Thailand’s 2021 fiscal reform that introduced a binding one-year disbursement deadline for investment budgets, replacing a previously unrestricted execution timeline. To identify how agencies adjusted project choices under this constraint, we apply a seeded LDA model to classify more than 360,000 Thai-language government investment projects and estimate the probability that each project reflects repair activity. We then implement a difference-in-differences framework that exploits variation in departments’ pre-reform reliance on construction-intensive projects as a measure of exposure to heightened implementation and compliance risk. We find that departments more exposed to the reform significantly increased their reliance on repair-oriented projects, which are typically smaller in scale and faster to execute. This shift emerged gradually and was more pronounced among larger departments. We also find that the shift coincided with higher post-reform disbursement rates, indicating that the reform achieved its primary administrative objective of accelerating budget execution. At the same time, the findings suggest a trade-off: by intensifying compliance pressure, efficiency-oriented fiscal rules can induce adaptive organizational responses that steer investment portfolios toward projects that are administratively easier to implement under tight timelines. Overall, the study highlights how fiscal rule design influences not only the pace of budget execution but also the composition of public investment through its effects on organizational incentives and implementation behavior.