The present textbook grew out of lecture notes for courses on the methods and applications of dynamic economic analysis that I have been teaching to graduate students over the years. The book is not meant to cover the whole state of the art in this area but to provide a compact presentation of the most essential concepts and results and to illustrate them by selected applications from various fields of economic research. The target readership consists of students and researchers who have little or no experience with solution techniques for dynamic economic models but who have a decent background knowledge in economics, calculus, and linear algebra. I hope that the book helps its readers to get acquainted with the basic issues and the most popular modelling frameworks of dynamic economic analysis and that it raises the appetite of its audience for a more complete and detailed study of this area.

Dynamic economic analysis is a vast area and the relevant literature is extensive. In order to achieve my goal of a compact presentation, I deliberately make two important restrictions that are also reflected in the title of the book. First, I only consider models, that are formulated in discrete time and, second, I do not deal with stochastic dynamics. The main justification of the first restriction is that I want to provide an overview of the most important concepts and methods of dynamic economic analysis without getting lost in technicalities. For some dynamic economic models, the choice between a discrete-time formulation and a continuous-time formulation is simply a matter of taste, whereas for others this choice is driven by the quest for analytical tractability. Moreover, there exist dynamic economic models that generate quite different predictions depending on which of the two formulations of time is applied. In my opinion, however, the basic issues arising in dynamic economic analysis can be illustrated with less technical effort in a discrete-time setting than in a continuous-time setting, which is why I restrict the presentation to the former case. By no means do I consider the discrete-time formulation as more relevant or more realistic than its continuous-time counterpart.