Consider the system of equations: pi = β0 + β0qi + β2ti + β3zi + ui qi = α0 + α1pi + α2ki + ԑi where p and q are endogenous variables. t, z and k are exogenous variables. u and ԑ are disturbance terms. And i is cross section. Explain how you would go about estimating the stated system of equations.
Consider the system of equations: pi = β0 + β0qi + β2ti + β3zi + ui qi = α0 + α1pi + α2ki + ԑi where p and q are endogenous variables. t, z and k are exogenous variables. u and ԑ are disturbance terms. And i is cross section. Explain how you would go about estimating the stated system of equations.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Consider the system of equations:
pi = β0 + β0qi + β2ti + β3zi + ui
qi = α0 + α1pi + α2ki + ԑi
where p and q are endogenous variables.
t, z and k are exogenous variables.
u and ԑ are disturbance terms. And i is cross section.
Explain how you would go about estimating the stated system of equations.
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