Why Choose Dynamic Programming?

This coming spring semester (F15) the department gets a brand new course in Dynamic Programming. Associate professor Bertel Schjerning and (soon to be) post.doc. Thomas Jørgensen will be lecturing the course. We've asked them a few questions. Below you can see the answers, and also the date for the information meeting.

Can you give an example of a problem you go through in the course?
The methods we you will learn are quite general. This means that a lot of economic problems can be analysed in the dynamic programming framework. Some problems are:

• How does optimal saving change over the life cycle?
• How can we efficiently solve and estimate dynamic economic models?
• How do firms optimally invest when there is not perfect competition?
• How do firms choose to enter or exit oligopoly markets?
• When is it optimal to retire?
• When is it optimal to replace your car or invest in a house?

Are there any courses it would be an advantage to pass before this?

Two courses are mandatory:

• Micro- and Macroeconomics C
• Quantitative Methods C 

A third course is not mandatory, but is extremely helpful:

• Advanced Microeconometrics (Master’s elective course)

The reason is, that a lot of the work is going to be Matlab-intensive. Advanced Microeconometrics provides students with basic skills in Matlab programming, something we take for granted in this course. You can still follow the course without it, but that would require the student to have a working knowledge of Matlab, python, Octave, Gauss, or some other (scientific) programming language.  

Does this course give you abilities to join other courses?
By training your skills in applied microeconomic theory and applied microeconometrics, it will improve your ability to follow other courses that rely on similar skills.

It provides important tools and background knowledge for formulating, solving and estimating dynamic economic models of individuals/families/governments/firms. Hence, students interested in advanced courses in theoretical micro and macroeconomics will also benefit from this course.

If I like this course, are there any other course I can join which complements this?
The list is long. One of the main advantages of the tools you will learn are evaluating policies in a theoretical framework. Some of the more obvious are:

• Advanced microeconometrics
• Tax policy
• Public economics
• Labor economics
• Industrial organization
• Computable General Equilibrium (Anvendte generelle ligevægtsmodeller)

What could be a master thesis topic related to your course?
Dynamic Programming is a “masters-thesis-generating-course“ as it introduces students to state-of-the-art methods from the current research frontier. There are extremely many possible topics which could use insights from this course. Examples could be:

• Optimal taxation and benefit systems
• Policy evaluations of actual or hypothetical reforms
• Dynamic labor supply over the life cycle
• Optimal retirement
• Firm and entrepreneurial dynamics
• Micro-founded macro economics

Info meeting
An info meeting about the course is held Friday 14:00 (2pm), November 21, 2014 in the large seminar room on the second floor of building 26 (Større øvelsessal).

Dynamic Programming is Masters Course at the Economics Programme. You can find the full course description here.