EC2SLS and EC3SLS for the two-way error component Model. Consider the two-way error component model given in
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EC2SLS and EC3SLS for the two-way error component Model. Consider the two-way error component model given in (6.9) and the covariance matrix \(\Omega_{j l}\) between the \(j\) th and \(l\) th equation disturbances given in (6.11):
(a) Derive the EC2SLS estimator for \(\delta_{1}\) in (7.1).
(b) Derive the EC3SLS estimator for \(\delta\) in (7.20) (Hint: See Baltagi (1981b).
(c) Repeat problem 7.7 parts
(a) and
(b) for the two-way error component EC2SLS and EC3SLS.
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