We have studied the electronic properties of the ladder compound alpha'-NaV
2O5, adopting a joint experimental and theoretical approach. The momentum-d
ependent loss function was measured using electron energy-loss spectroscopy
in transmission. The optical conductivity derived from the loss function b
y a Kramers-Kronig analysis agrees well with our results from local spin de
nsity approximation (LSDA) + U band-structure calculations upon application
of an antiferromagnetic alignment of the V 3d(xy) spins along the legs and
an on-site Coulomb interaction U between 2 and 3 eV. The decomposition of
the calculated optical conductivity into contributions from transitions bet
ween selected energy regions of the density of states reveals the origin of
the observed anisotropy of the optical conductivity. In addition, we have
investigated the plasmon excitations related to transitions between the van
adium states within an effective 16-site vanadium cluster model. Good agree
ment between the theoretical and experimental loss functions was obtained u
sing the hopping parameters derived from the tight-binding fit to the band-
structure and moderate Coulomb interactions between the electrons within th
e ab plane.