Instrumental Methods of Economic Analysis

2018/2019

Academic Year

ENG

Instruction in English

2

ECTS credits

Delivered at:

Department of Economics

Course type:

Bridging course

When:

1 year, 1 module

Instructor

Kichko, Sergey

Course Syllabus

Abstract

The purposes of the discipline "Instrumental Methods of Economic Analysis" are: understanding the basic concepts of mathematical analysis and linear algebra; and acquiring skills in solving optimization problems of various types.

Learning Objectives

• Understand the theory of elementary functions, methods of calculus related to the differentiation of single and multiple variable functions.
• Know the necessary and sufficient conditions for concavity/convexity of the function and maximum/minimum
• Be able to solve unconstrained and constrained optimization problems
• Have an understanding of the envelope theorem and be able to use it in the optimization problems.

Expected Learning Outcomes

• Be able to solve unconstrained and constrained optimization problems
• Have an understanding of the envelope theorem and be able to use it in the optimization problems

Course Contents

• Linear algebra: operation with matrices, square matrices, determinant, eigenvalues and eigenvectors
• Functions of one variable: derivative of the function, necessary and sufficient conditions for increasing/decreasing, concavity/convexity, extremum and inflection points.
• Functions of multiple variables: first and second order partial derivatives, Schwarz theorem, necessary and sufficient conditions for concavity/convexity and extremum points
• Unconstrained optimization of multiple variables functions: necessary and sufficient conditions for local/global maximum/minimum, envelope theorem
• Constrained optimization of multiple variable functions. Equality constrains: necessary and sufficient conditions for maximum/minimum, relationship between concavity/convexity of the function with the type of extremum. Inequality constrains: Kuhn-Tucker theorem, relationship between concavity/convexity of the function with the type of extremum

Assessment Elements

• class quizzes
• class participation
• written final exam

Interim Assessment

• Interim assessment (1 module)
  0.1 * class participation + 0.4 * class quizzes + 0.5 * written final exam

Bibliography

Recommended Core Bibliography

• Sundaram, R. K. (1996). A First Course in Optimization Theory. Cambridge University Press. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.b.cup.cbooks.9780521497701

Recommended Additional Bibliography

• Vinogradov, V. V. (2010). Mathematics for Economists. University of Chicago Press. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.b.ucp.bkecon.9788024616575