Structural models, information and inherited restrictions

George M. Lady and Andrew Buck ()

Economic Modelling, 2011, vol. 28, issue 6, 2820-2831

Abstract: The derived structural estimates of the system βY=γZ+δU impose identifying restrictions on the reduced form estimates ex post. Some or all of the derived structural estimates are presented as evidence of the model's efficacy. In fact, the reduced form inherits a great deal of information from the structure's restrictions and hypothesized sign patterns, limiting the allowable signs for the reduced form. A method for measuring a structural model's statistical information content is proposed. Further, the paper develops a method for enumerating the allowable reduced form outcomes which can be used to falsify the proposed model independently of significant coefficients found for the structural relations.

Keywords: Qualitative analysis; Structural form; Reduced form; Identification; Entropy; Model falsification (search for similar items in EconPapers)
JEL-codes: C15 C18 C51 C52 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:28:y:2011:i:6:p:2820-2831

DOI: 10.1016/j.econmod.2011.08.021

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