Consider the following system of equations : According to the order condition, the first equation is :
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UGC-NET 2024 Question 67: Endogeneity, instruments and simultaneous equations
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Consider the following system of equations: Y₁ = α₀ + α₁ Y₂ + α₃ Y₃ + α₄ X₁ + α₅ X₂ + U₁ Y₂ = β₀ + β₁ Y₃ + β₂ Y₁ + β₃ X₂ + U₂ Y₃ = λ₀ + λ₁ x₁ + λ₂ x₂ + λ₃ x₃ + U₃ According to the order condition, the first equation is: (A) Unidentified (B) Just identified (C) Over identified (D) Not possible to say because the reduced form of the model is not given
Also written as: Consider the following system of equations: Y_1 = alpha_0 + alpha_1 Y_2 + alpha_3 Y_3 + alpha_4 X_1 + alpha_5 X_2 + U_1 Y_2 = beta_0 + beta_1 Y_3 + beta_2 Y_1 + beta_3 X_2 + U_2 Y_3 = lambda_0 + lambda_1 x_1 + lambda_2 x_2 + lambda_3 x_3 + U_3 According to the order condition, the first equation is:
Endogeneity, instruments and simultaneous equations has come up 8 times in 3 exams since 2021.
What this question tests
This question is on Simultaneous equations: identification and estimation, part of Endogeneity, instruments and simultaneous equations in Econometrics.
When a system of equations can be estimated and by which method.
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