Título en español.

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.