Dynamic Programming for Economists: From Basic Growth Models to Computational Methods (Routledge-Giappichelli Studies in Business and Management)

Dynamic programming is a powerful technique for modeling problems requiring sequential decisions in macroeconomics and finance.The drawback is that its analytic foundations are mathematically demanding, making existing textbooks often too technical for beginners.Moreover, dynamic models most often cannot be solved analytically and, therefore, require the use of numerical methods, whose implementation details can be discouraging. This book is a primer on dynamic programming and related numerical techniques.To assist the reader, the discussion focuses on a specific example: a simple optimal growth model.Once the reader has mastered the most important concepts, these can be easily applied to business cycle models, New Keynesian frameworks, dynamic CAPM, and many other issues. The deterministic growth model is used to introduce dynamic programming in an intuitive way.Technicalities are reduced to a minimum, though not avoided, to provide a solid foundation for the applications (and to stim