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Credibilidad, pérdida social y estancamiento económico: el caso de Puerto Rico
[Credibility, Social Loss and Economic Stagnation: the Case of Puerto Rico]

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  • Rodríguez, Carlos A.

Abstract

This work studies the significance of the social costs generated by the dynamic inconsistency of the decisions taken by the politicians in Puerto Rico. The dynamic inconsistency problem arises when the government makes sequential decisions that compromise its future actions. The same one affects the credibility of the governmental decisions and generates social costs. The social loss is analyzed by means of the deviations of the economic activity on its potential level, according to the theoretical model presented.

Suggested Citation

  • Rodríguez, Carlos A., 2011. "Credibilidad, pérdida social y estancamiento económico: el caso de Puerto Rico [Credibility, Social Loss and Economic Stagnation: the Case of Puerto Rico]," MPRA Paper 41277, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:41277
    as

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    References listed on IDEAS

    as
    1. Barro, Robert J., 1986. "Reputation in a model of monetary policy with incomplete information," Journal of Monetary Economics, Elsevier, vol. 17(1), pages 3-20, January.
    2. Milesi-Ferretti, Gian Maria, 1994. "Wage Indexation and Time Consistency," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 26(4), pages 941-950, November.
    3. Edward M. Gramlich, 1979. "Macro Policy Responses to Price Shocks," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 10(1), pages 125-166.
    4. David Backus & John Driffill, 1985. "Rational Expectations and Policy Credibility Following a Change in Regime," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 52(2), pages 211-221.
    5. Haubrich, Joseph G & Ritter, Joseph A, 2000. "Dynamic Commitment and Incomplete Policy Rules," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 32(4), pages 766-784, November.
    6. Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-491, June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Social loss; credibility; dynamic inconsistency; economic stagnation;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics

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