Dynamic Economics: Quantitative Methods and Applications, vol 1

Jerome Adda and Russell W. Cooper ()
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Russell W. Cooper: University of Texas at Austin

in MIT Press Books from The MIT Press

Abstract: In part I the authors first review the formal theory of dynamic optimization; they then present the numerical tools and econometric techniques necessary to evaluate the theoretical models. In language accessible to a reader with a limited background in econometrics, they explain most of the methods used in applied dynamic research today, from the estimation of probability in a coin flip to a complicated nonlinear stochastic structural model. These econometric techniques provide the final link between the dynamic programming problem and data. Part II is devoted to the application of dynamic programming to specific areas of applied economics, including the study of business cycles, consumption, and investment behavior. In each instance the authors present the specific optimization problem as a dynamic programming problem, characterize the optimal policy functions, estimate the parameters, and use models for policy evaluation. The original contribution of Dynamic Economics: Quantitative Methods and Applications lies in the integrated approach to the empirical application of dynamic optimization programming models. This integration shows that empirical applications actually complement the underlying theory of optimization, while dynamic programming problems provide needed structure for estimation and policy evaluation.

Keywords: dynamic economics; optimization (search for similar items in EconPapers)
JEL-codes: C01 C6 C8 E2 J3 (search for similar items in EconPapers)
Date: 2003
Edition: 1
ISBN: 0-262-01201-4
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Citations: View citations in EconPapers (204)

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