Simultaneous Equation Econometrics: The Missing Example

11 Pages Posted: 5 Jun 2006

See all articles by Dennis Epple

Dennis Epple

Carnegie Mellon University; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute)

Bennett T. McCallum

Carnegie Mellon University - David A. Tepper School of Business; National Bureau of Economic Research (NBER)

Abstract

For introductory presentation of issues involving simultaneous equation systems, a natural vehicle consists of supply and demand relationships for a single good. One would expect to find in econometrics textbooks a supply-demand example featuring actual data in which structural estimation methods yield more satisfactory results than does ordinary least squares. But a search of 26 existing textbooks finds no example with actual data in which all crucial parameter estimates are of the proper sign and are statistically significant. The present article accordingly develops a simple but satisfying example, for broiler chickens, based on U.S. annual data from 1960 to 1999.

Suggested Citation

Epple, Dennis and McCallum, Bennett T., Simultaneous Equation Econometrics: The Missing Example. Economic Inquiry, Vol. 44, No. 2, pp. 374-384, 2006. Available at SSRN: https://ssrn.com/abstract=906384

Dennis Epple (Contact Author)

Carnegie Mellon University ( email )

Tepper School of Business
Pittsburgh, PA 15213-3890
United States
412-268-1536 (Phone)
412-268-7357 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Bennett T. McCallum

Carnegie Mellon University - David A. Tepper School of Business ( email )

5000 Forbes Avenue
Pittsburgh, PA 15213-3890
United States
412-268-2347 (Phone)
412-268-7357 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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