Consider the following two-equation model: y1 = 1y2 + 11x1 + 21x2 + 31x3 + 1, y2 = 2y1 + 12x1 + 22x2 + 32x3

Consider the following two-equation model: y1 = γ1y2 + β11x1 + β21x2 + β31x3 + ε1, y2 = γ2y1 + β12x1 + β22x2 + β32x3 + ε2.

a. Verify that, as stated, neither equation is identified.

b. Establish whether or not the following restrictions are sufficient to identify (or partially identify) the model:

(1) β21 = β32 = 0,

(2) β12 = β22 = 0,

(3) γ1 = 0,

(4) γ1 = γ2 and β32 = 0,

(5) σ12 = 0 and β31 = 0,

(6) γ1 = 0 and σ12 = 0,

(7) β21 + β22 = 1,

(8) σ12 = 0, β21 = β22 = β31 = β32 = 0,

(9) σ12 = 0, β11 = β21 = β22 = β31 = β32 = 0.