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Introduction to Simultaneous Equations Models

  • Thomas B. Fomby
  • Stanley R. Johnson
  • R. Carter Hill

Abstract

The purpose of this chapter is to provide an informal introduction to the unique estimation problems arising in economic models where the values of several variables are determined simultaneously. Some examples include the usual Keynesian and monetary macroeconomic models as well as supply and demand equations of microeconomic markets. The models addressed to this point are appropriate when the conditional expectation, E(y X), is approximately linear and the stochastic process which generates the regressor X operates independently of the error e t. This assumption allows the determination of X to be treated independently of y. In some cases, however, it is more appropriate to treat X and y as jointly determined.

Keywords

Exogenous Variable Endogenous Variable Simultaneous Equation Simultaneous Equation Model Reduce Form Equation 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer Science+Business Media New York 1984

Authors and Affiliations

  • Thomas B. Fomby
    • 1
  • Stanley R. Johnson
    • 2
  • R. Carter Hill
    • 3
  1. 1.Department of EconomicsSouthern Methodist UniversityDallasUSA
  2. 2.The Center for Agricultural and Rural DevelopmentIowa State UniversityAmesUSA
  3. 3.Department of EconomicsLouisiana State UniversityBaton RougeUSA

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