Consider the following simultaneous equation model: Yu-A1+ A2Ya+AXn+un (1) Y=B₁+BY+BX+12 (2) In this model, Y's are endogenous variables and X's are exogenous variables. u's are stochastic error terms. a. Obtain the reduced form regressions. Show your details. (5 marks) (5 marks) b. Which of the above equations is identified? c. Find values for A2, A3, B2, and Bs in terms of your reduced form coefficients. (10 marks) d. Suppose it is known a priori that A3 is zero. Will this change your answers to the preceding (a, b, and c) questions? Why? (5 marks)
