In simultaneous equations, a Dependent variable in an equation can become independent variables in the equation the other. For example an investment of a country affected by exchange rates, crude oil prices, and export value. On the other hand the exchange rate is strongly influenced by the value of an investment.
; Investment = Exchange + Oil + Exports ................. (1)
; Exchange = Investment ; ; ................. (2)
Thus, in simultaneous equations, the term dependent variable and independent variables become endogenous and exogenous variables.
few Analysis Techniques in Simultaneous Equations:
1. ILS (Inderect Least Square)
2. 2-SLS (Two-Stage Least Square)
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