Consider the following model:

Y1 = 2Y2 − 3X1 − 2X2 + u1 Y2 = −2Y3 + X3 + u2 Y3 = −Y1 − Y2 + X1 − X3 + u3 The variables Y1, Y2, Y3 are endogenous and X1, X2, X3 are exogenous. Do the following:

(a) Write the model in its typical form.

(b) Write the model using the matrix notation form for the tth observation and then for all T observations.

(c) Find the reduced form solution and discuss what the main characteristic of these reduced form equations is. What is the meaning of these equations?