This new book will be welcomed by econometricians and students of econometrics everywhere. Introducing discrete time modelling techniques and bridging the gap between economics and econometric literature, this ambitious book is sure to be an invaluable resource for all those to whom the terms unit roots, cointegration and error correction forms, chaos theory and random walks are recognisable if not yet fully understood. INDICE 1. Introduction 2. First Order Difference Equations 2.1 Introduction 2.2 Solution Functions 2.2.1 Homogenous Equations 2.2.2 Non-Homogenous Equations 2.3 Phase Diagrams 2.3.1 Diagrammatic Representation of Linear, First Order Difference Equation 2.4 Examples of FODE Models 2.4.1 The Keynsian Multiplier 2.4.2 A Simple Phillips Stabilization Model 2.4.3 The Cobweb Model 3. Second Order Difference Equations 3.1 Introduction 3.2 Characteristic Roots 3.2.1 Real Roots 3.2.2 Complex Roots 3.2.3 Properties of the Characteristic Equation 3.2.4 Completing the Solution 3.3 Examples of SODE Models 3.3.1 The Multiplier- Accelerator Model 3.3.2 Phillips Proportional Stabilization Policy Model 3.3.3. A Cobweb Model with Firm Entry 4. Higher Order and Systems of Difference Equations 4.1 Higher Order Difference Equations 4.1.1 Economic Example 4.2 Systems of Difference Equations 4.2.1 Matrix Techniques 4.2.2 Eigenvalues and Eigenvectors 4.3 Examples of Systems of Difference Equations 4.3.1 Cobweb Model with Firm Entry 4.3.2 Cournot Duopoly Model 4.3.3 A Demography Model 5. Intertemporal Optimization 5.1 Introduction 5.2 Dynamic Programming 5.2.1 Finite Horizon Problems 5.2.2 Infinite Horizon Problems 5.2.3 Uncertainty 5.3 Lagrange Multiplier Approach 5.3.1 Finite Horizon 5.3.2 Infinite Horizon 5.4 Examples 5.4.1 Model of Investment in Health 5.4.2 Stochastic Optimization 6. Nonlinear Difference Equations 6.1 Introduction 6.1.1 Phase Diagrams 6.2 Linearizing Nonlinear Difference Equations 6.2.1 Nonlinear First Order Difference Equation 6.3 A Basic Neoclassical