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Saturday, September 18, 2010

Introductory Maths and Stats: Discrete-time Intertemporal Optimization...

This should be the culminating lecture of QM0.  Students should be able to understand the difference between static and dynamic optimization.  The intuition for this can be built by focusing time on explaining how one derives the life-time budget constraint from the budget constraints for each time period (basically just add/aggregate, integrate depending).  Really invest time in going through the details of exactly what the budget constraint is how it is derived etc.  This is important as it comes up again and again...

Intertemporal Choice: Two-Period Example: Wouldn't really change much from this section, it is nicely written and hits all the high points...

Intertemporal Choice: T-Period Example: Here the focus is on the permanent income hypothesis, which is a pretty good example that demonstrates the techniques involved.

More Complicated T-period Example: This section should be cut from the lecture and covered in tutorials...this would allow lecturer to move through the above material at more measured pace.  I would jump from the permanent income hypothesis material straight to the simple discussion of dynamic programming.

Simple Discussion of Dynamic Programming: Section is good, although the maths needs to be simplified a bit so as to coincide with the permanent income hypothesis section that would proceed it.  Perhaps tutors could extend the dynamic programming case in the tutorials...

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