Alpha C. Chiang

Extremely well written presentation of calculus of variations and optimal control theory and applications to economics. The selection of examples the author works through in patient detail include several canonical models of economics, such as neo-classical growth theory, optimal investment with adjustment costs, and the optimal extraction of a natural resource. Highly recommended for upper year undergraduate students in economics. You will understand why your macro instructors refer to first-order conditions as Euler equations! You can follow up reading chapter 9 by reading chapter 5 (Economic Policy in a Growth Model) in Solow's book called Growth Theory, for a nice discussion of the Euler equation and the foundations of growth theory.… (meer)