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Consider the following reformulation of the model given in Problem 11.18.
Rt = A1 + A2Mt + A3Yt + u1t
Yt = B1 + B2Rt + B31t + u2t
where in addition to the variables defined in the preceding problem, I stands for investment (measured by gross private domestic investment, GPDI). Assume that M and J are exogenous.
a. Which of the preceding equations is identified?
b. Using the data in Table 11-2 (on the textbook s Web site), estimate the parameters of the identified equation(s).
c. Comment on the difference in the results of this and the preceding problem. |
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