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A Beginner’s Guide to Dynamic Optimization in Economics

  • Textbook
  • © 2025

Overview

Authors:
  1. Gerald Shively

    1. Department of Agricultural Economics, Purdue University, West Lafayette, USA

  • Provides an accessible, stand-alone introduction to dynamic optimization
  • Focuses on building intuition alongside mathematical rigor
  • Gives economics students the tools to conduct practical, applied economics research

Part of the book series: Classroom Companion: Economics (CCE)

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About this book

This book introduces the basic concepts and tools of dynamic optimization as used in economics. The book emphasizes intuition, gradually adding small doses of mathematical development as needed to provide an accessible stand-alone introduction to the topic. All three primary approaches to dynamic optimization are covered: the calculus of variations, optimal control theory and dynamic programming. Numerous examples from the economics literature are presented, along with reference to key historical developments in the fields of microeconomics, macroeconomics, natural resource economics and other sub-disciplines. Written in an informal and readable style, the book focuses on building intuition alongside mathematical rigor in order to establish a foundation for more advanced treatment and study. 

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Table of contents (13 chapters)

  1. Front Matter

    Pages i-xi
    Download chapter PDF

  2. Basics

    • Gerald Shively
    Pages 1-11

  3. Mr. Kuchenfresser

    • Gerald Shively
    Pages 13-23

  4. Impatience

    • Gerald Shively
    Pages 25-31

  5. Mr. Kuchenfresser Meets Ms. Banker

    • Gerald Shively
    Pages 33-39

  6. Euler, Euler, Master of Us All

    • Gerald Shively
    Pages 41-51

  7. Equations of Motion

    • Gerald Shively
    Pages 53-70

  8. Inventory and Stock Adjustment Models

    • Gerald Shively
    Pages 71-78

  9. Optimal Control

    • Gerald Shively
    Pages 79-95

  10. Further Refinements in Optimal Control

    • Gerald Shively
    Pages 97-109

  11. Dynamic Stability

    • Gerald Shively
    Pages 111-120

  12. Dynamic Programming

    • Gerald Shively
    Pages 121-140

  13. A World of Uncertainty

    • Gerald Shively
    Pages 141-153

  14. To Infinity … and Beyond

    • Gerald Shively
    Pages 155-167
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Authors and Affiliations

  • Department of Agricultural Economics, Purdue University, West Lafayette, USA

    Gerald Shively

About the author

Gerald Shively is Professor of Agricultural Economics at Purdue University. He conducts research on agricultural development and natural resource management worldwide, and has received numerous teaching and research awards. He is a Fellow of the Agricultural and Applied Economics Association and the International Association of Agricultural Economists. 

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This PDF has been created in accordance with the PDF/UA-1 standard to enhance accessibility, including screen reader support, described non-text content (images, graphs), bookmarks for easy navigation, keyboard-friendly links and forms and searchable, selectable text. We recognize the importance of accessibility, and we welcome queries about accessibility for any of our products. If you have a question or an access need, please get in touch with us at [email protected]. Please note that a more accessible version of this eBook is available as ePub.

EPUB accessibility summary

This ebook is designed with accessibility in mind, aiming to meet the ePub Accessibility 1.0 AA and WCAG 2.2 Level AA standards. It features a navigable table of contents, structured headings, and alternative text for images, ensuring smooth, intuitive navigation and comprehension. The text is reflowable and resizable, with sufficient contrast. Math is represented either as MathML, LaTeX or in images. If math is represented as image, Alt Text might not be present. We recognize the importance of accessibility, and we welcome queries about accessibility for any of our products. If you have a question or an access need, please get in touch with us at [email protected].

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