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Problem:
a) Using a financial or economics theory, determine a simultaneous structural model and a recursive model, explaining each variable used in the models.
b) Using your above formulated simultaneous structural model, obtain the reduced form equations and deduce whether the equations are over/under or just-identified.
c) Based on your results from part (b), explain which methodology(ies) can be used to estimate the reduced form equations and why.
d) Explain in details which test can be used to test for the exogeneity of a variable. Answers must be supported by an example.
In a simple economy, people consume only 2 goods, food and clothing. The market basket of goods used to compute the CPI has 50 units of food and 10 units of clothing.
question number one
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kindly help in in doing the assignment
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