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Q3. Consider the following simultaneous equation models. Y1= a1 + B2Y3, + 8X1, +ult (1) Y2 = az + B,Y1+ B2Y3, + u2 (2) Y3;

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Q3. Consider the following simultaneous equation models. Y1= a1 + B2Y3, + 8X1, +ult (1) Y2 = az + B,Y1+ B2Y3, + u2 (2) Y3; = az + B2Y2 + 82X2 + u3 (a) Can you estimate equation (1) with OLS assuming X1 and X2 are exogenous? Explain [2] (b) Use the order condition to identify which of the above equations are just identified. [2]

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