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Statement of a problem № m58706

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Consider the following two-equation model: y1 = γ1y2 + β11x1 + β21x2 + β31x3 + ε1, y2 = γ2y1 + β12x1 + β22x2 + β32x3 + ε2. a. Verify that, as stated, neither equation is identified. b. Establish whether or not the following restrictions are sufficient to identify (or partially identify) the model: (1) β21 = β32 = 0, (2) β12 = β22 = 0, (3) γ1 = 0, (4) γ1 = γ2 and β32 = 0, (5) σ12 = 0 and β31 = 0, (6) γ1 = 0 and σ12 = 0, (7) β21 + β22 = 1, (8) σ12 = 0, β21 = β22 = β31 = β32 = 0, (9) σ12 = 0, β11 = β21 = β22 = β31 = β32 = 0.




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