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Simultaneous Equation Econometrics: The Missing Example

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Abstract

For 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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  • Dennis Epple & Bennett McCallum, "undated". "Simultaneous Equation Econometrics: The Missing Example," GSIA Working Papers 2004-E6, Carnegie Mellon University, Tepper School of Business.
    • Handle: RePEc:cmu:gsiawp:-1132963504
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    Cited by:

    1. Thomas H. W. Ziesemer, 2023. "Semi-endogenous growth in a non-Walrasian DSEM for Brazil: estimation and simulation of changes in foreign income, human capital, R&D, and terms of trade," Economic Change and Restructuring, Springer, vol. 56(2), pages 1147-1183, April.
    2. Fatai Abiola Sowunmi & Abeeb Adetunji Bello & Adebayo Isaiah Ogunniyi & Abiodun Olusola Omotayo, 2022. "Delving Deeper into Market Concentration of Poultry Feed and the Driving Factors for Brand Switching: Evidence from Commercial Egg Producers in Nigeria," Sustainability, MDPI, vol. 14(13), pages 1-18, June.
    3. 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.
    4. 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.
    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. Ziesemer, Thomas, 2011. "What Changes Gini Coefficients of Education? On the dynamic interaction between education, its distribution and growth," MERIT Working Papers 2011-053, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    7. 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.
    8. Iimi, Atsushi & Smith, James Wilson, 2007. "what is missing between agricultural growth and infrastructure development ? cases of coffee and dairy in Africa," Policy Research Working Paper Series 4411, The World Bank.
    9. 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.
    10. Eivind Hestvik Brækkan & Øystein Myrland, 2021. "“All along the curves”: Bridging the gap between comparative statics and simultaneous econometric models," Empirical Economics, Springer, vol. 60(3), pages 1559-1573, March.

    More about this item

    JEL classification:

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

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