Work in Progress

This paper examines how bureaucratic communication influences policymaking when citizens can resist policies before or after enactment. I develop a two period model with a leader, a bureaucrat, and a citizen. The leader chooses between a moderate and an extreme policy; the bureaucrat observes the policy and the citizen's ex post blocking cost; and the citizen decides whether to block the policy before or after it becomes public. Since citizen blocking imposes management costs on the bureaucrat, even leader aligned bureaucrats may disclose extreme policies when citizens can block after enactment. When ex post blocking is too costly, however, truthful revelation requires sufficiently citizen aligned bureaucrats. Introducing lying costs for the bureaucrat expands the truthtelling region and generates a partial concealment equilibrium in which the bureaucratic messages are informative but do not fully reveal the policy. In this region, the leader chooses extreme policies with higher probability than under full concealment, while citizens block less aggressively because a message that the policy is moderate remains partially credible. Thus, with lying costs, the relationship between bureaucratic communication and extreme policy attempts is non-monotone: truthtelling deters extreme policies, full concealment induces leader caution, and partial credibility is conducive to extreme policy attempts. The analysis identifies bureaucratic rumours as an informal constraint on the leader operating even when bureaucrats lack formal policymaking authority.

(with Ilisa Goenka, Marek Kapička, and Ctirad Slavík)​ 

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This paper studies the distributional impact of a labour income tax reform in the Czech Republic using a rich quantitative model with heterogeneous agents. The tax reform launched as part of the stimulus package during the COVID-19 pandemic, effective from January 1, 2021, abolished the concept of the “supergross wage”, which reduced marginal tax rates for middle income individuals and increased the personal and child tax allowances. We characterise changes in the equilibrium allocation resulting from the policy change, depending on assumptions about how the tax reform might be financed. We quantify the long-run impact of the reform and study transitional dynamics. Calibrating the model to the 2020 Czech economy, we find that the welfare gains from the reform are equivalent increase in consumption for all agents at all dates and states by 1.89%. Additionally, we find that the reforms result in welfare gains for both skilled and unskilled workers, with skilled workers realising welfare gains of 2.91% in consumption equivalent units, whereas unskilled workers see welfare gains of 1.55%.