Presenter: Ben Rosa
Paper: “Fiscal Stimulus in the Highway Procurement Market,” joint work with Dakshina G De Silva
Abstract:
During the Great Recession, the US Government implemented a substantial fiscal stimulus initiative, allocating over $27 billion toward highway infrastructure spending. This spending primarily aimed to support "shovel-ready" projects that could swiftly impact employment and payrolls. The effectiveness of this program in generating employment and jobs has been a subject of considerable debate, as discussed by Dupor and Conley (2013) and Wilson (2012).
An aspect of the highway infrastructure program receiving limited scrutiny is its potential benefits to the procurement agency, particularly in procuring services during a period of subdued demand. Through an analysis of Texas procurement data, we find that contracting amid the depths of the recession was remarkably competitive, with a notably higher number of bidders per auction. Moreover, winning bids (and bids) consistently came in well below the procurement agencies' cost estimates and significantly under the procurement costs for similar projects awarded before the onset of the Great Recession. Hence, in this paper, we model contractor bidding and participation decisions and examine how they were impacted during the Great Recession and stimulus spending.