12. Suppose you have been asked to estimate a simultaneous equation model (SEM) to jointly predict...

 

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12. Suppose you have been asked to estimate a simultaneous equation model (SEM) to jointly predict the Height and Weight of adults (i) aged (25-45), that is: Height = Bo+BGender; + B FatherHt; + B3 Ethnicity; + B Diet; + Weight + = Weight, B02+B Gender; + BFatherWt, + B32 Ethnicity; + B42 Diet; + 52 Height; +2i where: = Height; the subject's height in millimetres, = Weight; the subject's weight in grams, Gender; =1 if the subject is male and 0 otherwise, FatherHti = the height of the subject's father in millimetres, = Father Wt the weight of the subject's father in grams, Ethnicity: 1 if the subject is white (Caucasian), 0 otherwise, Diet: 1 if the subject eats a balanced diet, 0 otherwise. a) Can the Height equation be estimated satisfactorily using OLS? If not, why not? (5 marks) b) Are the Height and Weight equations identified? What does the term identification mean in this context? (5 marks) c) Describe the steps involved in an alternative estimation procedure that can be used to obtain the parameter estimates of the Height and Weight equations. (5 marks) d) What problems can occur is estimating identifiable SEMs, use this example to illustrate your answer. (5 marks) 12. Suppose you have been asked to estimate a simultaneous equation model (SEM) to jointly predict the Height and Weight of adults (i) aged (25-45), that is: Height = Bo+BGender; + B FatherHt; + B3 Ethnicity; + B Diet; + Weight + = Weight, B02+B Gender; + BFatherWt, + B32 Ethnicity; + B42 Diet; + 52 Height; +2i where: = Height; the subject's height in millimetres, = Weight; the subject's weight in grams, Gender; =1 if the subject is male and 0 otherwise, FatherHti = the height of the subject's father in millimetres, = Father Wt the weight of the subject's father in grams, Ethnicity: 1 if the subject is white (Caucasian), 0 otherwise, Diet: 1 if the subject eats a balanced diet, 0 otherwise. a) Can the Height equation be estimated satisfactorily using OLS? If not, why not? (5 marks) b) Are the Height and Weight equations identified? What does the term identification mean in this context? (5 marks) c) Describe the steps involved in an alternative estimation procedure that can be used to obtain the parameter estimates of the Height and Weight equations. (5 marks) d) What problems can occur is estimating identifiable SEMs, use this example to illustrate your answer. (5 marks)

Answer rating: 100% (QA)

a The Height equation in the simultaneous equation model SEM as described above cannot be estimated satisfactorily using Ordinary Least Squares OLS re... View the full answer