A NEW IDENTIFICATION RULE AND AN ESTIMATOR FOR THE SIMULTANEOUS EQUATION MODEL USING THE NOTATION OF THE RETICULAR ACTION MODEL

An alternative sufficient condition for checking identifiability of the simultaneous equation model is proposed using the notation of the RAM (Reticular Action Model; McArdle & McDonald, 1984). The new rule can be more widely applied for checking identifiability of the simultaneous equation model compared with other rules. Using the notation of the RAM, an estimation procedure for the simultaneous equation model based on GLS (generalized least squares) is also proposed. When there are fixed parameters and linearly constrained parameters in the model, the estimates which contain the covariances between observable endogenous variables and residual variables can be obtained from explicit formulas of matrix. The consistency and the asymptotic covariance of this estimator are shown. By using the data from Kluegel, Singleton & Starnes (1989), the procedure is empirically compared to ML (maximum likelihood) and GLS (Browne, 1974).