Which structural coefficients if any can be estimated from


The model Y1t = β10 + β12 Y2t + γ11 X1t + u1t Y2t = β20 + β21 Y1t + u2t produces the following reduced-form equations:
Y1t = 4 + 8 X1t
Y2t = 2 + 12 X1t

a. Which structural coefficients, if any, can be estimated from the reduced-form coefficients? Demonstrate your contention.

b. How does the answer to (a) change if it is known a priori that (1) β12 = 0 and (2) β10 = 0?

Solution Preview :

Prepared by a verified Expert
Microeconomics: Which structural coefficients if any can be estimated from
Reference No:- TGS01174649

Now Priced at $10 (50% Discount)

Recommended (97%)

Rated (4.9/5)