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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.
A chance sample of visitors to a National Park was interviewed regarding their impressions of the Park. Of 200 interviewees, 120 said that they would probably make a return visit
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
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