Dynamic Economics: Optimization by the Lagrange Method

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This work provides a unified and simple treatment of dynamic economics using dynamic optimization as the main theme, and the method of Lagrange multipliers to solve dynamic economic problems. The author presents the optimization framework for dynamic economics in order that readers can understand the approach and use it as they see fit. Instead of using dynamic programming, the author chooses instead to use the method of Lagrange multipliers in the analysis of dynamic optimization because it is easier and more efficient than dynamic programming, and allows readers to understand the substance of dynamic economics better. The author treats a number of topics in economics, including economic growth, macroeconomics, microeconomics, finance and dynamic games. The book also teaches by examples, using concepts to solve simple problems; it then moves to general propositions.
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Editorial Reviews

From the Publisher

"Dr. Chow points out that the too-little-known direct Lagrangian procedure delivers all the optimal solutions that the popular indirect-utilities method can deliver, and does so more economically in the sense that redundant laborious calculations of any indirect utilities can be avoided...it is regrettable if the popular indirect method has eclipsed attention by scholars from the efficient and effective direct Lagrangian approach. We are all in Gregory Chow's debt for a cogent and needed important reminder."--Paul Samuelson, Pacific Economic Review

"Dynamic Economics convinced me of the usefulness of the Lagrange method....The book is very clear and easy to follow; applications are interesting and clearly treated."--Alberto Bisin, Massachusetts Institute of Technology

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Product Details

  • ISBN-13: 9780195101928
  • Publisher: Oxford University Press, USA
  • Publication date: 2/28/1997
  • Edition description: New Edition
  • Pages: 248
  • Lexile: 1690L (what's this?)
  • Product dimensions: 6.40 (w) x 9.20 (h) x 1.30 (d)

Meet the Author

Gregory C. Chow is Class of 1913 Professor of Political Economy, Professor of Econometrics, and Director of the Econometric Research Program at Princeton University. He has also advised the Prime Ministers of Taiwan and China on economic policy and reform. He is the author of numerous books, including Analysis and Control of Dynamic Economic Systems (1975), Econometrics (1983), and Understanding China's Economy (1994).

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Table of Contents

Ch. 1 Introduction 3
Ch. 2 Dynamic Optimization in Discrete Time 19
Ch. 3 Economic Growth 32
Ch. 4 Theories of Market Equilibrium 51
Ch. 5 Business Cycles 80
Ch. 6 Dynamic Games 111
Ch. 7 Models in Finance 139
Ch. 8 Models of Investment 172
Ch. 9 Numerical Methods for Solving First-Order Conditions in Dynamic Optimization Problems 185
References 208
List of Mathematical Statements 214
Solutions to Selected Problems 216
Index 228
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