The Use of Principal Components in Simultaneous Equations: An Empirical Application

Eugene Jones

No 278516, 1985 Annual Meeting, August 4-7, Ames, Iowa from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: The transformation of jointly dependent and predetermined variables into principal components is shown to be an effective method for handling multicollinearity in simultaneous equations at the second stage. Estimates are obtained which are theoretically meaningful and • statistically significant. Simulations from the reduced forms are realistic relative to historical values.

Keywords: Agricultural and Food Policy; Research and Development/Tech Change/Emerging Technologies (search for similar items in EconPapers)
Pages: 14
Date: 1985-08
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea85:278516

DOI: 10.22004/ag.econ.278516

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