312913 Doktorandenkolloquium "Theoretical Economists’s Toolbox" (Ko) (WiSe 2026/2027)

Economic theory and theoretical economic modelling very much is about trial and error. Almost everyone having started into her/his doctoral studies in economic theory experienced despair at questions like „Why did the authors’ set up their model this way and not differently?, „What kind of modelling assumptions go well together?“, „Why do I end up in an unsolvable dead end?“.

This class is intended to prevent you from reinventing the wheel. It provides a problem-oriented view on setting up economic models and learning about the economic implications of typical modelling assumptions. Topics include:

• economic sense of and nonsense behind assumptions
• modelling heterogeneity: from easy to complicated, and when best to avoid it
• trap-doors in dynamic systems: lock-ins, sensitivity to inital conditions, explanatory limits of non-linear and linearized systems
• the world of well-defined problems: delving into the world of HARA-class utility functions and beyond. Why we love CES in all of its varieties.
• the beauty of closed-form solutions, the ugliness of having none
• tools and techniques: comparative statics tools, comparative dynamics tools, linearization
• CV and EV: assessing welfare changes and welfare comparisons
• a stochastic world: Markov property, limiting distributions, iid when and why, MPS and stochastic dominance, stochastic trends and unit roots.
• which parametric distributions go well with standard modelling assumptions?
• risk in economic theory: Big names, big results. Arrow, Diamond/Rothschild/Stiglitz, v. Neumann, Merton, Laffont, just to name a few
• interpreting results: how far do they carry us? Model sensitivity, robustness of results
• the kingdom of „far far away“: asymptotics, and the art of always followowing something through to the end
• additional takeaway: a thorough knowledge of classical contributions to economic theory