Q3. Consider the following simultaneous equation models. Y1t=1+3Y3t+1X1t+u1tY2t=2+1Y1t+3Y3t+u2tY3t=3+2Y2t+2X2t+u3t (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] (c) Consider the following set of simultaneous equations: Y1t=1+1X1t+u1tY2t=2+1Y1t+3Y3t+u2tY3t=3+2Y2t+2X2t+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 Y2t and Y3t ? [2] Q3. Consider the following simultaneous equation models. Y1t=1+3Y3t+1X1t+u1tY2t=2+1Y1t+3Y3t+u2tY3t=3+2Y2t+2X2t+u3t (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] (c) Consider the following set of simultaneous equations: Y1t=1+1X1t+u1tY2t=2+1Y1t+3Y3t+u2tY3t=3+2Y2t+2X2t+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 Y2t and Y3t ? [2]