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(0) Consider the following set of simultaneous equations: Ylt = I11 + 61X1L + ult (4') Y2: = (12 +31Y1t+ 3Y3t+u2t (5) Y3E = I13
(0) Consider the following set of simultaneous equations: Ylt = I11 + 61X1L + ult (4') Y2: = (12 +31Y1t+ 3Y3t+u2t (5) Y3E = I13 'l\" EZYZt + 62X2t + \"3t (6) Can you estimate equation (4) with OLS assuming X1 and X2 are exogenous? Explain. [2] E (d) Write down the reduced form equation for the endogenous variables wt and Y3t? [2] E (e) Can you estimate equations (5) and (6) with the Indirect Least Square method? Explain. [2] Z
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