Mathematical Methods in Economics

Mathematical methods in economics are an important tool for conducting analysis. They are used in the construction of theoretical models that allow us to display the available links in everyday life. Also, using these methods, the behavior of business entities and the dynamics of economic indicators in the country are predicted quite accurately.

In more detail I would like to dwell on forecasting indicators of economic objects, which is an instrument of decision theory. Forecasts of social and economic development of any country are based on a mathematical analysis of certain indicators (inflation dynamics, gross domestic product, etc.). Formation of the expected indicators is carried out using such methods of applied statistics and econometrics as regression analysis, factor analysis and correlation analysis.

The branch of the study "Economics and Mathematical Methods" has always been quite interesting for scientists in this field. Thus, Academician Nemchinov has identified five mathematical methods of research in planning and forecasting:

- method of mathematical modeling;

- balance method ;

- vector-matrix method;

- method of successive approximation;

- The method of optimal public evaluation.

Another academic, Kantorovich, divided the mathematical methods into four groups:

- models of interaction between economic units;

- Macroeconomic models, including demand models and the balance method;

- optimization models;

Linear modeling.

Modeling of economic systems is applied with the purpose of making an effective and correct decision in the economic sphere. At the same time, modern computer technology is mainly used.

The modeling process itself should be carried out in this order:

1. Statement of the problem. It is necessary to clearly articulate the problem, determine the objects related to the problem being solved, and the situation realized as a result of its solution. It is at this stage that a quantitative and qualitative analysis of subjects, objects and situations relevant to them is carried out.

2. System analysis of the problem. All objects must be divided into elements with the definition of the connection between them. It is at this stage that it is best to use mathematical methods in the economy, with the help of which a quantitative and qualitative analysis of the properties of newly formed elements is conducted and as a result of which certain inequalities and equations are deduced. In other words, we get a system of indicators.

3. System synthesis is a mathematical formulation of the problem, during the organization of which a mathematical model of the object is formed and algorithms for solving the problem are determined. At this stage, there is a possibility that the adopted models of the previous stages may turn out to be incorrect, and to get the correct result one will have to return one or two steps back.

Once the mathematical model is formed, you can proceed to develop a program for solving the task on the computer. If you have a fairly complex object that consists of a large number of elements, you will need to create a database and tools to work with it.

If the task takes a standard form, then any suitable mathematical methods in the economy and a ready-made software product are used.

The final stage is the direct operation of the generated model and obtaining the correct results.

Mathematical methods in the economy should be used precisely in a certain sequence and with the use of modern information and computing technologies. Only in this order there is an opportunity to exclude subjective volitional decisions based on personal interest and emotions.