Economics · Econometrics - Recursive Models
Which of the following statements are TRUE concerning a triangular (recursive) simultaneous equation system? A. Parameters can be validly estimated using separate applications of OLS to each equation. B. Independent variables may be correlated with error terms in other equations. C. Two-stage least squares would lead to unbiased but inefficient estimation. D. Error terms across equations are assumed to be mutually uncorrelated. Choose the correct option:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1C and D only
- 2B and C only
- 3A, B and C only
- 4A and D only✓
Correct answer
A and D only
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