Government Spending Spikes at Year-Ends Linked to Inefficiency
Public spending tends to increase at the end of fiscal years, which is not ideal as it can lead to inefficiencies. A new study looked at data from 27 countries and found that these spending spikes are indeed caused by the end of fiscal years. Countries with better administrative quality have smaller year-end spending effects. Unexpected positive demand shocks actually decrease year-end spending. This research sheds light on the reasons behind late spending in public finance.