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Consider the following model:
Y1t= A1 + A2Y2t + A3X1t + u1t
Y2t = B1 + B2Y1t + u2t
where the Y s are the endogenous variables, the X s the exogenous, and the u s the stochastic error terms. Based on this model, the following reduced form regressions are obtained
Y1t = 6 + 8X1t
Y2t = 4 + 12X1t
a. Which structural coefficients, if any, can be estimated from these reduced form equations?
b. How will our answer change if it is known a priori that 1. A2 = 0 and 2. A1 = 0? |
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