For the model y1 = 1y2 + 11x1 + 21x2 + 1, y2 = 2y1 + 32x3

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For the model y1 = γ1y2 + β11x1 + β21x2 + ε1, y2 = γ2y1 + β32x3 + β42x4 + ε2, show that there are two restrictions on the reduced-form coefficients. Describe a procedure for estimating the model while incorporating the restrictions.

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Econometric Analysis

ISBN: 978-0130661890

5th Edition

Authors: William H. Greene

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Question Posted: Nov 11, 2010 02:51 AM

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For the model y1 = 1y2 + 11x1 + 21x2 + 1, y2 = 2y1 + 32x3

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