Suppose we change the model of Exercise 20.10 as follows: Assume that M is determined exogenously. a.

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Suppose we change the model of Exercise 20.10 as follows:

R; = Bo + B1 M; + B2Y1 +u1t Y; = ao + aị Rị + a2l, +u2i I, = y0 + yi R¢ + u31

Assume that M is determined exogenously.

a. Find out which of the equations are identified.

b. Estimate the parameters of the identified equation(s) using the data given in the following table. Justify your method(s).

Observation GDP (Y1) M2 (Y2) GPDI (X1) FEDEXP (X2) ТВ6 (Xз) 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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Suppose we change the model of Exercise 20.10 as follows: Assume that M is determined exogenously. a.

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a Now the equations for R and Y are not identified while the investment equation is exac...View the full answer

Basic Econometrics

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