In a system of 4 simultaneous equations,how many endogenous variables must be excluded from an equation in the system for the parameters to be identified?
A)1
B)2
C)3
D)4

Question

Quizplus · Accepted Answer

In a system of 4 simultaneous equations, 3 endogenous variables must be excluded from an equation in the system for the parameters to be identified, according to the order condition for identification. This ensures that there is enough variation in the data to estimate the parameters of the equation of interest.

In a System of 4 Simultaneous Equations,how Many Endogenous Variables