Question: Answer it if you are 100% sure 9. Consider the following simultaneous equations model - Bi + Bip. + Bir, tus UP = BP +

Answer it if you are 100% sure

9. Consider the following simultaneous equations model - Bi + Bip. + Bir, tus UP = BP + B2 p. + Biz + up where pi is determined via y. = y?. Let yi = up = yP. The first equation is meant to be a supply function and the second equation is meant to be a demand function. In this model we assume that (up, up) given (1, 25 ) has conditional mean zero. (a) Write down the reduced form equations for p, and y.. (b) What is the order condition for the supply parameters? (c) What is the rank condition for the demand parameters? (d) Discuss how you will estimate the demand parameters efficiently by GMM under heteroskedas ticity. (e) What is the benefit and the cost for using the system estimation

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