Work in Progress

This paper examines how bureaucrats strategically use informal communication to influence policymaking. I construct a two-period model with three agents: a Leader who plans to enact a policy, a Citizen who can block the policy, and a Bureaucrat who transmits information about the policy through rumours. I model bureaucrats as strategic agents whose preference alignment alters equilibrium outcomes, rather than passive intermediaries. I characterise Perfect Bayesian Equilibria under two bureaucratic alignment scenarios. Citizen-aligned bureaucrats use truthful information transmission when management costs are low, enabling citizens to prevent extreme policies preemptively. In contrast, leader-aligned bureaucrats strategically withhold or misrepresent information, thereby facilitating policy implementation that would otherwise face citizen opposition. I also analyse the impact of bureaucratic alignment on citizen-weighted welfare. These findings demonstrate that bureaucrats impact policy outcomes through rumours, even when bureaucrats lack formal 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%.