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(c) Consider the following set of simultaneous equations: Ylt = al+ 61X1+ +ult ( 4 ) Y2t = az + B1Yl+ + BY3+ + u2t

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(c) Consider the following set of simultaneous equations: Ylt = al+ 61X1+ +ult ( 4 ) Y2t = az + B1Yl+ + BY3+ + u2t (5 ) Y3t = a3 + BY2+ + 62X2+ + u3t Can you estimate equation (4) with OLS assuming X1 and X2 are exogenous? Explain. [2] (d) Write down the reduced form equation for the endogenous variables Y2, and Y3,? [2]

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