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Simultaneous Equation Econometrics: The Missing Example

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  • Dennis Epple
  • Bennett T. Mccallum

Abstract

For introductory presentation of issues involving simultaneous equation systems, a natural vehicle consists of supply and demand relationships for a single good. One would expect to find in econometrics textbooks a supply-demand example featuring actual data in which structural estimation methods yield more satisfactory results than does ordinary least squares. But a search of 26 existing textbooks finds no example with actual data in which all crucial parameter estimates are of the proper sign and are statistically significant. The present article accordingly develops a simple but satisfying example, for broiler chickens, based on U.S. annual data from 1960 to 1999. (JEL C30) Copyright 2006, Oxford University Press.

Suggested Citation

  • 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.
  • Handle: RePEc:oup:ecinqu:v:44:y:2006:i:2:p:374-384
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    Cited by:

    1. Ziesemer, Thomas, 2011. "What Changes Gini Coefficients of Education? On the dynamic interaction between education, its distribution and growth," MERIT Working Papers 053, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    2. Thomas H.W. Ziesemer, 2014. "Country terms of trade: trends, unit roots, over-differencing, endogeneity, time dummies, and heterogeneity," International Review of Applied Economics, Taylor & Francis Journals, vol. 28(6), pages 767-796, September.
    3. Peter C. Reiss, 2011. "Structural Workshop Paper --Descriptive, Structural, and Experimental Empirical Methods in Marketing Research," Marketing Science, INFORMS, vol. 30(6), pages 950-964, November.
    4. Iimi, Atsushi, 2007. "Infrastructure and trade preferences for the livestock sector : empirical evidence from the beef industry in Africa," Policy Research Working Paper Series 4201, The World Bank.
    5. Christine Mutz & Thomas Ziesemer, 2008. "Simultaneous estimation of income and price elasticities of export demand, scale economies and total factor productivity growth for Brazil," Applied Economics, Taylor & Francis Journals, vol. 40(22), pages 2921-2937.
    6. Parajuli, Rajan & Zhang, Daowei & Chang, Sun Joseph, 2016. "Modeling stumpage markets using vector error correction vs. simultaneous equation estimation approach: A case of the Louisiana sawtimber market," Forest Policy and Economics, Elsevier, vol. 70(C), pages 16-19.

    More about this item

    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General

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