What are reduced form equations in a system of equations?
A)the structural equations rewritten with endogenous variables as a function of exogenous variables
B)the structural equations without the endogenous regressors
C)the exogenous variables reworked as a function of the other exogenous variables
D)the equations remaining when the parameters of structural equations are reduced to generate additional degrees of freedom

Question

Quizplus · Accepted Answer

Reduced form equations are derived from structural equations by expressing the endogenous variables solely as functions of the exogenous variables, thereby isolating the direct effect of changes in exogenous variables on the endogenous variables.

What Are Reduced Form Equations in a System of Equations