Read preview Synopsis Building on a base of simple economic theory and elementary linear algebra and calculus, this broad treatment of static and dynamic optimization methods discusses the importance of shadow prices, and reviews functions defined by solutions of optimization problems. Recently revised and expanded by the author, the second edition of this popular student text will be a valuable resource for upper level undergraduate and graduate students. Excerpt Making optimal use of scarce resources, that is, maximizing subject to constraints, is the central theme of economics. But students of economics are often taught the mathematics of constrained maximization as a branch of mathematics, and its economic applications follow separately. An integrated treatment that relates the mathematics to the economics from the beginning has the potential for providing a quicker and deeper understanding.
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He is the John J. Avinash was born in Bombay now Mumbai and earned a B. He is widely regarded as one of the leading economists of his generation.
In an era of increasing specialization in economics, Avinash has made seminal contributions to an extraordinary range of subfields that includes microeconomics, game theory, public economics, urban economics, international trade, industrial organization, macroeconomics, international macroeconomics, economic growth and development, and the law and institutions of economic governance.
Indeed, there is hardly an area of economics that has not benefited from his clear thinking and prodigious economic modeling skills. Having learned the tools of applied theory from Nobel-laureate Robert Solow and others at the Massachusetts Institute of Technology, Avinash has taken this analytical approach to real-world problems to a new level, lending insight and rigor to whatever areas he touched.
This paper allowed a rigorous analysis of the product diversity that can be supported by the market in a world of economies of scale. The Dixit-Stiglitz formulation soon became the backbone of advances in international trade theory, macroeconomic theory, economic growth, and other areas.
The 1,plus citations that the paper has garnered underestimate its impact, because the formulation has become so well accepted that not every user feels compelled to cite the original source. In collaboration with Robert Pindyck, Avinash wrote Investment under Uncertainty, which has become required reading for economics graduate students and business students alike.
The authors provide analytical methods for making capital investment decisions in a world of irreversibility and uncertainty.
They recognized that physical investments made in a world of uncertainty have the features of financial options, because the investor almost always must decide whether to invest now exercise the option or wait until later. This insight allowed them to bring the analytical tools of option theory to bear on a wide range of practical problems that had not previously been approached this way. This approach emphasizes the cost-and-price relationships that characterize an economic equilibrium, in contrast to the primal approach that focuses on inputs and outputs.
The Dixit-Norman monograph provided an elegant restatement and presentation of familiar results in trade theory and paved the way to numerous, important extensions.
His prose is crisp and clear and he writes with wit, grace, and an immense knowledge of history, economics, and literature. His skill in exposition extends as well to the classroom, where Princeton economics students over three decades have benefited from his clear-headed and highly organized approach to microeconomic theory, games of strategy, the economics of uncertainty, international trade theory, and mathematics for economists.
Avinash spent a decade too as a joint appointee in the Woodrow Wilson School of Public and International Affairs, where he gave future policymakers the tools to analyze international trade policy, economic development, and strategic interactions. Indeed, his teaching ranged even more widely in his frequent workshop collaborations with sociologists and political scientists.
Avinash has served both the University and the economics profession in numerous administrative roles. At Princeton, he has been director of graduate studies, chair of the junior faculty recruiting committee, departmental representative, and a member of the schedules committee, the course of studies committee, and the committee of committees.
In the profession, he has held various leadership positions for the Econometric Society, the American Economic Association, and the American Academy of Arts and Sciences, including stints as president of the first two of these organizations.
He is a true scholar in every sense of the world. Annual Emeriti Booklet Excerpt:.
Optimization in Economic Theory
Avinash K.Dixit – Optimization in Economic Theory