In the structural relationship model, the solution to the equations in (12.2.20) implies a restriction on , the same restriction seen in the functional relationship case.
(a) Show that in (12.2.20), the MLE of σ2δ is nonnegative only if Sxx ‰¥ (1/)Sxy. Also, the MLE of σ2ε is nonnegative only if Syy ‰¥ Sxy.
(b) Show that the restrictions in part (a), together with the rest of the equations in (12.2.20), imply that

Transcribed Image Text:

|Szyl Szz Syy |Szyl