Notes on Consumption Theory: Deterministic and Stochastic Dynamic Models (Classroom Companion: Economics)

This textbook offers a compact, yet formal, synthesis of the broad field of consumption theory. Written in a coherent and accessible way, this book introduces graduate and postgraduate students to dynamic optimization applied to consumption under certainty and uncertainty, in discrete and continuous time. Delving into deterministic and stochastic models, including the use of Brownian motions, the book offers a deeper understanding of consumption decisions and their impact on asset pricing and investment in partial and general equilibrium.

This book compiles lecture notes from advanced courses in micro- and macroeconomics, ensuring a self-contained introduction to the subject. Balancing simplicity with analytical rigor, the book equips readers with essential methodological tools for advanced research in economics. With empirical evidence and exercises integrated throughout, this textbook stands as the go-to resource for scholars and students alike, fostering further theoretical explorations in the field. Basic knowledge of economics, mathematics, and econometrics is recommended for a comprehensive understanding.

Giuseppe Travaglini is Professor of Economics at the University of Urbino Carlo Bo. He is currently Head of the Department of Economics, Society, Politics (DESP). He teaches Macroeconomics and Financial Markets. His research interests include consumption theory, investment, dynamic models, technological change, and economic growth.

Giorgio Calcagnini is Professor of Economics at the University of Urbino Carlo Bo. He is currently Rector of the same University. He teaches Econometrics and Monetary Economics. His research focuses on the role of market imperfections, firms’ investment decisions, structural change in the banking industry, and financial literacy and its relation with consumption.

Alessandro Bellocchi is a Postdoctoral Research Fellow at the Department of Economics, Society, Politics (DESP) of the University of Urbino Carlo Bo. He currently teaches European Economic Policy. His research interests include income distribution, labor market, consumption theory, technological change and economic growth.