Optimal Control Theory and Static Optimization in Economics, 1992, 353 pages,Daniel LГ©onard, 0521337461, 9780521337465, Cambridge University Press, 1992

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Optimal control theory is a technique being used increasingly by academic economists to studyproblems involving optimal decisions in a multi-period framework. This textbook is designed tomake the difficult subject of optimal control theory easily accessible to economists while at thesame time maintaining rigour. Economic intuitions are emphasized, and examples and problemsets covering a wide range of applications in economics are provided to assist in the learningprocess. Theorems are clearly stated and their proofs are carefully explained. The development ofthe text is gradual and fully integrated, beginning with simple formulations and progressing toadvanced topics such as control parameters, jumps in state variables, and bounded state space.For greater economy and elegance, optimal control theory is introduced directly, without recourseto the calculus of variations. The connection with the latter and with dynamic programming isexplained in a separate chapter. A second purpose of the book is to draw the parallel betweenoptimal control theory and static optimization. Chapter 1 provides an extensive treatment ofconstrained and unconstrained maximization, with emphasis on economic insight and applications.Starting from basic concepts, it derives and explains important results, including the envelopetheorem and the method of comparative statics. This chapter may be used for a course in staticoptimization. The book is largely self-contained. No previous knowledge of differential equations isrequired.

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