Hello
I am building a simultaneous equation and it will be run with the reg3 syntax
along with the simultaneous equation :
Y1 = X1 + X2 + X3 + X4
Y2 = Y1 + X1 + + X4 + X5 + X6
the variables Y1 and X1 are bound to the instrument variables X7 + X8 so the syntax I created is like this
reg3 (eq1: Y1 = X1 + X2 + X3 + X4) (eq2: Y2 = Y1 + X1 + + X4 + X5 + X6), endog(Y1 X1) exog (X7 X8) first
I want to ask
1. Can the independent variable in EQ 1 also be used as an independent variable in EQ 2? such as X1 and X4. For the notes, X1 is an endogenous variable that is influenced by the instrument variable, while X4 is not.
2. I see that the instrument variables X7 and X8 affect not only X1 but also Y1, so I also make Y1 an endogenous variable that is also bound to the instrument variable, is this possible to estimate?
I would like to get insight from the experts here
thank you
I am building a simultaneous equation and it will be run with the reg3 syntax
along with the simultaneous equation :
Y1 = X1 + X2 + X3 + X4
Y2 = Y1 + X1 + + X4 + X5 + X6
the variables Y1 and X1 are bound to the instrument variables X7 + X8 so the syntax I created is like this
reg3 (eq1: Y1 = X1 + X2 + X3 + X4) (eq2: Y2 = Y1 + X1 + + X4 + X5 + X6), endog(Y1 X1) exog (X7 X8) first
I want to ask
1. Can the independent variable in EQ 1 also be used as an independent variable in EQ 2? such as X1 and X4. For the notes, X1 is an endogenous variable that is influenced by the instrument variable, while X4 is not.
2. I see that the instrument variables X7 and X8 affect not only X1 but also Y1, so I also make Y1 an endogenous variable that is also bound to the instrument variable, is this possible to estimate?
I would like to get insight from the experts here
thank you
