Kind of math knowledge required to understand a working paper

Hi. Mine is a very simple question. I would just like to know what kind of mathematical knowledge I need to understand this paper (the optimization problem on pages 9-10, for example). Please, could you help me? Is it static or dynamic optimization? Thank you very much!

Re: Kind of math knowledge required to understand a working paper

Hey GordanComStock.

You will need to understand utility theory, and this can be understood by reading works by Von Neumann/Morgenstern and later authors.

The optimization stuff is Lagrange Multipliers which is taught in a Multi-variable/Vector Calculus book.

The Lagrange stuff requires a knowledge of normal calculus techniques including all the differential calculus.

For convex stuff, you also want to understand Jensens Inequality for a variety of things including for expectation.

Finally I have to ask: what do you mean by static and dynamic optimization?

Re: Kind of math knowledge required to understand a working paper

Hi. Thank you for your answer. I've learned maths by studying Alpha C. Chiang's book of "fundamental methods of mathematical economics", on which I've studied static optimization. By static optimization, i mean optimal choice at a single point of time; by dynamic opt., i mean optimization over time. Sorry for my English!