Research interests
political economics, microeconomics, game theory, public finance
Work in progress (comments very welcome)
Abstract: The paper analyses recurring group decision making problems under uncertainty regarding future preferences of the actors involved, problems faced by many real world committees. The need for continuity in policy making implies that past decisions play an important role in determining subsequent ones, creating dynamic procedural linkages. In this context we compare two bargaining protocols: i) the implicit status-quo protocol under which present period policy serves as the status-quo for the next period and ii) the explicit status-quo protocol under which the decision in the current period involves both current policy and a (possibly different) status-quo for the ensuing period. We show that the two bargaining protocols lead to notably different policy outcomes. In Stationary Markov Perfect equilibrium, unique under slight refinement, the difference is most marked in the periods of common interest. These are still characterized by disagreement under implicit status-quo bargaining, while under explicit status-quo bargaining they lead to the policy decisions that fully reflect the congruent preferences of the committee members. Furthermore, the former bargaining protocol leads quickly to gridlock with constant policy unresponsive to the varying preferences in the committee, something the latter bargaining protocol does not deliver. However, the implicit status-quo protocol prevents abuse of proposal power, which is possible under the explicit status-quo. With this insight, we re-interpret explanations for the existence of `asymmetry' in the Federal Open Market Committee (FOMC) directive.
Simple equilibria in dynamic bargaining games over policies
Abstract: The paper constructs equilibria in a class of infinite horizon dynamic bargaining models in which players care about all the dimensions of a policy space. Both one-dimensional and multi-dimensional policy spaces are analysed. All the equilibria have attractive property in being simple and having intuitive structure. Equilibrium behaviour is a result of two opposing forces. One force pushes players into proposing policies as close as possible to their single period optimum. A second and strategic force pushes players in the opposite direction, in an attempt to propose policies that constrain the future proposals of all other players. The resulting dynamics of the policies is shown to converge to the most preferred policy of the median player. The paper also uncovers the multiplicity of equilibria in certain environments, which greatly complicates their computational simulation.
Abstract: This short note establishes existence and uniqueness of the solution to the Bellman functional equation, arising in dynamic programming. The result differs from the one presented in Stokey and Lucas (1989) in that it does not require the feasibility correspondence to be continuous and shows that upper hemicontinuity suffices. The note also relaxes assumption of continuity of the objective function and requires it to be only upper semicontinuous. Finally, we provide a sketch of possible applications of the result.
Working papers
Central Banks' Voting Records and Future Policy
with Roman Horvath and Katerina Smidkova
Czech National Bank working paper 11, 2010
with Adam Gersl
Institute of Economic Studies, Faculty of Social Sciences
working paper 15, 2010
Already published
Mundell in 3D, Synchronization of Supply and Demand Shocks among Sectors not Countries, With Application to CEECs
with Michaela Krcilkova
forthcoming in Empirica, DOI 10.1007/s10663-011-9174-3
Doctor visit co-payment exemption for children: First look at the data
Finance a Uver - Czech journal of Economics and Finance, 60(1), 2010, 58-72
Czech Economic Review, 1(3), 2007, 324-334
Judging the Sustainability of Czech Public Finances
Czech Economic Review, 1(1), 2007, 15-31
with Ondrej Schneider and Petr Hedbavny
Czech Economic Review, 1(1), 2007, 32-5
What are Their Words Worth? Political Plans and Economic Fiscal Consolidations in New EU Member States
with Ondrej Schneider
Eastern European Economics, 44(5), 2006, 6-37
Fiscal Policy in New EU Member States: Go East, Prudent Man!
with Ondrej Schneider
Post-Communist Economies, 18(2), 2006, 139-166
EMU from Post-Keynesian Perspective (in Czech)
Politicka Ekonomie, (5), 2005, 686-714
Labour and Capital Taxation: Theory and Application in the Czech Republic (in Czech)
with Ondrej Schneider and Martin Sali
Finance a Uver - Czech journal of Economics and Finance, 53(11-12), 2003, 539-561