Simultaneous Equation Econometrics: The Missing Example
AbstractFor introductory presentation of issues involving identification and estimation of simultaneous equation systems, a natural vehicle is a model consisting of supply and demand relationships to explain price and quantity variables for a single good. One would accordingly expect to find in introductory econometrics textbooks a supply-demand example featuring actual data in which structural estimation methods yield more satisfactory results than ordinary least squares. In a search of 26 existing textbooks, however, we have found no such example-indeed, no example with actual data in which all parameter estimates are of the proper sign and statistically significant. This absence is documented in the present paper. Its main contribution, however, is the development of a simple but satisfying example, for broiler chickens, based on U.S. annual data over 1960-1999.
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Bibliographic InfoPaper provided by Carnegie Mellon University, Tepper School of Business in its series GSIA Working Papers with number 2004-E6.
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Postal: Tepper School of Business, Carnegie Mellon University, 5000 Forbes Avenue, Pittsburgh, PA 15213-3890
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Other versions of this item:
- Dennis Epple & Bennett T. Mccallum, 2006. "Simultaneous Equation Econometrics: The Missing Example," Economic Inquiry, Western Economic Association International, vol. 44(2), pages 374-384, April.
- C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
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