Economics Stack Exchange
Economics Stack Exchange

Questions tagged [mathematical-economics]

The application of mathematical methods to represent theories and analyze problems in economics.

Mathematical economics is the application of mathematical methods to represent theories and analyze problems in economics. By convention, the applied methods refer to those beyond simple geometry, such as differential and integral calculus, difference and differential equations, matrix algebra, mathematical programming, and other computational methods.

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Use of mathematics and imprecise definition of terms

As a postgraduate student of economics I've been trying to expand my mathematical "toolset". While doing so I've talked to engineers, physicists and mathematicians, many of which have disdained the use of mathematics in economics. Their arguments…
han-tyumi
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Applications of Trig functions in Economics?

Are there any applications of trig functions (ie $\sin(x)$, $\cos(x)$,$\tan(x)$) in economics?
EconJohn
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Is complex analysis used in economics?

It's frequently useful in physics and engineering applications; are there any applications in theoretical economics? (If not, were there any attempts at incorporating CA that just never caught on?) See http://en.wikipedia.org/wiki/Complex_analysis.
sirallen
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Why not talk about utility functions on the surreal line when preferences are lexicographic, etc?

I've been reading about the surreal numbers out of curiosity. Though I don't totally understand them, I wonder why I don't see them used more often. Surreal numbers extend the real line to also include infinitesimal and infinite numbers (transfinite…
Pburg
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Which areas of mathematical knowledge are required for understanding different genres of theoretical economics literature (and at which level)?

I would like to know which mathematical skills are most important to understanding different types of theoretical economics literature. An ideal answer would list disciplines used for different 'genres' of literature; for example: "Mathematical…
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Envelope Theorem in Keen and Slemrod (2017)

This question pertains to the paper "Optimal Tax Administration" by Slemrod and Keen (2017). The IMF working paper is freely available on SSRN, however, it is not necessary to know the paper in order to understand the question. I am confused on how…
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Is there any economic meaning to log returns?

I recently had a discussion with a friend regarding log returns and any economic meaning that could have as a measure in the sense of "assessing the benefit received for compensating work done in a previous time period." He rather suggested that…
user6731
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Envelope Theorem

Say I'm solving for consumption given income, and we assume that an interior solution exists: $$ \max_c U(c, Y)\\ C(Y) = \arg\max_c U(c, Y)\\ $$ However, there is no closed-form solution for $C(Y)$. But I know it is cont. differentiable. Now I am…
FooBar
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L-infinity and weak-star topology

While reading economics papers, especially those related to economy with land, I often encounter the terms $L^\infty$ and the "weak* topology". They seem like very basic terms, but I couldn't find a basic explanation of them. Here is a typical…
Erel Segal-Halevi
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Indifference curves and equivalence classes

Last week in class, my professor described indifference curves in the context of modelling consumer choice with multiple goods. He defined a partial-ordering operator $\prec$ and an equivalence operator $\sim$ to manipulate tuples that satisfied the…
Erwan Ounn
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Comparative dynamics in forward-looking equation

I have set up and solved an optimization problem with time $t$ endogenous state variables, $\alpha_t$ and $\beta_t$ and choice variable $s_t$. After some manipulation, the first-order condition for $s_t$ is of the…
John
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What are the fundamental economic proofs

We had a question on this site for Fundamental equations in economics. What I'd like to know is what are the most important proofs needed in economics?
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Aren't all cost functions step functions?

Long Question: Overview: While I understand that over certain intervals (i.e. less than the width of the step), they may appear not to be because the step is outside of consideration, and over other intervals (much, much larger) the step seems…
Jason Nichols
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Is there an economic interpretation of the envelope theorem?

I wonder if envelope theorem has also some hidden economic interpretation. For example, Lagrangian multiplier in economics can have interpretation of 'shadow price' which is useful economic concept. The envelope theorem seems like something that…
WilliamT
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Just how much calculus is involved in the study of economics?

I'm a sophomore at a community college that is set to transfer to the University of California as an economics major. It's required that I took Calculus 1 and Calculus 2, but not Probability and Statistics – which I think is strange. In Principles…
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