Consider the following model R t Icirc sup2 0 Icirc sup2 1 M t Icirc sup2 2 Y t u 1t Y t Icirc plusmn 0 Icirc plusmn 1 R t Icirc plusmn 2 I t u 2t where the variables are as defined in Exercise 20 8 Treating I (domestic investment) and M exogenously, determine the identification of the system Using...

Here both the equations are exactly identified One can us ...

Consider the following model: R t = Î² 0 + Î² 1 M t + Î² 2

Question:

Consider the following model:

R_t = Î²₀ + Î²₁M_t + Î²₂Y_t + u_1t

Y_t = Î±₀ + Î±₁R_t + Î±₂ I_t + u_2t

where the variables are as defined in Exercise 20.8. Treating I (domestic investment) and M exogenously, determine the identification of the system. Using the data given in the following table, estimate the parameters of the identified equation(s).

GDP (Y1) ТВ6 (Xз) Observation M2 (Y2) GPDI (X1) FEDEXP (X2) 3,771.9 3,898.6 4,105.0 4,341.5 4,319.6 4,311.2 4,540.9 4

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Basic Econometrics

ISBN: 978-0073375779

5th edition

Authors: Damodar N. Gujrati, Dawn C. Porter

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Question Posted: May 29, 2018 03:52 AM

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Consider the following model: R t = Î² 0 + Î² 1 M t + Î² 2

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Here both the equations are exactly identified One can us...View the full answer

Basic Econometrics

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