Use it or lose it: On the incentives to spend annual defence operating budgets

In most western countries, there is a strong incentive for defence department budget-holders to expend all of the funds they are authorized to spend in a fiscal year. In this paper, we question whether this emphasis makes sense. We develop a model of a defence department's operating expenditure...

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Bibliographic Details
Published inDefence and peace economics Vol. 25; no. 4; pp. 401 - 413
Main Authors Hurley, W.J., Brimberg, Jack, Fisher, Brent
Format Journal Article
LanguageEnglish
Published Switzerland Routledge 01.01.2014
Taylor & Francis LLC
Subjects
Canada
Costs
Criticism
Defence departments
Defence policy
Defense spending
Economic models
Economics of defence organization
Federal funding
Government departments
H83 Public Administration
Lapsed funding
Managers
Military expenditure
Studies
Use it or lose it
Western countries
Canada
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Summary:In most western countries, there is a strong incentive for defence department budget-holders to expend all of the funds they are authorized to spend in a fiscal year. In this paper, we question whether this emphasis makes sense. We develop a model of a defence department's operating expenditure assuming a fixed level of funding for a year and uncertain costs. The results of the model suggest that the incentive for departmental managers to expend all authorized funds is inefficient. We explore the implications of the model for the Department of National Defence (DND) in Canada in light of the recent criticism of DND lapsed funding by the Auditor-General of Canada.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:1024-2694
1476-8267
DOI:10.1080/10242694.2013.780758