ELECTORAL CYCLES IN FEDERAL-GOVERNMENT PRIME CONTRACT AWARDS - STATE-LEVEL EVIDENCE FROM THE 1988 AND 1992 PRESIDENTIAL ELECTIONS

Theory: The political business-cycle theory is used to test for state- level accelerations in contract awards and deobligations induced by pr esidential elections. Hypotheses: Government contracting agencies acce lerate contract awards, and reduce the level of deobligations, immedia tely before presidential elections. The cycles should not involve any total increase in spending. Methods: Pooled-time-series analysis of mo nthly Department of Defense and civilian agency contract awards and de obligations in each state between October 1985 and December 1992. Resu lts: Both contract awards and deobligations behave as expected. Civili an agency contract awards rise immediately before presidential electio ns and primaries, and both Department of Defense and civilian agency d eobligation activity virtually cease as the elections approach. Althou gh the total level of activity is unchanged in election years, the cyc les are clear. This supports the notion that the cycles are important politically even though they have little macroeconomic impact.