Abstract: This chapter explains simultaneous-equation models, and how to estimate them using instrumental variables (or two-stage least squares). These techniques are needed to avoid simultaneity bias (aka endogeneity bias). The lead example will be hypothetical supply and demand equations for butter in the state of Wisconsin. The source of endogeneity bias will be explained, and so will methods for working around this problem.
Publication Year: 2012
Publication Date: 2012-06-19
Language: en
Type: book-chapter
Indexed In: ['crossref']
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