# What are some applications of Real Analysis in Graduate Economics?

I am interested as to what areas of masters/PhD coursework that learning the fundamentals of Real Analysis would be beneficial for?

I am aware of its applications in Econometrics proofs and analysis, but what of mathematical economics, microeconomics, and macroeconomics that one would run into during either graduate degree?

Resources to consult or links to relevant papers would be appreciated!

My favorite example of real analysis' application in micro is the proof that lexicographic preference cannot be represented by any utility function. (A succinct version of the proof is given in p.43 of MWG.) It uses the notion of cardinality of sets, in particular, the different cardinalities between the rationals and the reals, which are some of the first things one learns in a real analysis course.

Other materials in real analysis, such as set operations, closedness, openness, continuity, differentiability, boundedness, compactness, etc., find their ways into every nook and cranny of economic theory. Some examples include:

• Classical demand theory, which deals mostly with $$\mathbb R^n$$, the $$n$$-dimensional commodity space, draws on a lot results from real analysis
• Any theoretical work that involves probability, e.g. econometrics as well as risk/uncertainty in micro or macro, would rely on some basic measure theory, an advanced topic in real analysis
• Dynamic programming/optimal control, a technique for solving DSGE (and other) models, relies on the contraction mapping theorem
• Separating hyperplane theorem is used to prove the existence of general equilibrium
• Brouwer's fixed point theorem is used to prove the existence of Nash equilibrium

See some of the book recommendations and related questions on this site (1, 2, 3, 4) for more examples.

• Thank you, much appreciated! I have a lot to go on with this answer. – Brennan Jul 9 at 21:21
• that was a great answer. I would put optimal control in with dynamic programming. – mark leeds Jul 10 at 2:55
• @markleeds: Thanks. I edited my answer to reflect your suggestion. – Herr K. Jul 10 at 16:50