Consider the supply and demand model below, where (x) and (w) are exogenous. a. Find the reduced-form

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Consider the supply and demand model below, where $x$ and $w$ are exogenous.

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a. Find the reduced-form equations for $p$ and $q, q=\pi_{11} x+\pi_{21} w+v_{1}$ and $p=\pi_{12} x+\pi_{22} w+v_{2}$, expressing the reduced-form parameters in terms of $\alpha$ 's and $\beta$ 's.

b. Suppose $\pi_{11}=1 / 5, \pi_{21}=1 / 5, \pi_{12}=2 / 5$, and $\pi_{22}=2 / 5$. Solve for as many of the $\alpha$ 's and $\beta$ 's as you can.

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Principles Of Econometrics

ISBN: 9781118452271

5th Edition

Authors: R Carter Hill, William E Griffiths, Guay C Lim

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Question Posted: Apr 02, 2024 02:00 AM

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Consider the supply and demand model below, where $x$ is exogenous. a. Find the reduced-form equations for $p$ and $q, q=\pi_{11}+\pi_{21} x+v_{1}$ and $p=\pi_{12}+\pi_{22} x+v_{2}$,...
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Consider the supply and demand model below, where (x) and (w) are exogenous. a. Find the reduced-form

Question:

= Demand: qap+x+w+e Supply: p Bg + e =

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Principles Of Econometrics

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