New lights on the correlation matrix implied by a recursive path model

Seyid Abdellahi Ebnou Abdem (), Zouhair El Hadri () and M’barek Iaousse ()
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Seyid Abdellahi Ebnou Abdem: Faculty of Sciences Mohammed V University in Rabat
Zouhair El Hadri: Faculty of Sciences Mohammed V University in Rabat
M’barek Iaousse: Hassan II University of Casablanca

Quality & Quantity: International Journal of Methodology, 2024, vol. 58, issue 1, No 7, 119-139

Abstract: Abstract Path Analysis is a statistical method to study the causal relationships between observed variables. The specification and the estimation steps are crucial in the whole process. In fact, the relationships between variables and their status are specified. In addition, the model parameters are estimated based on the so-called correlation matrix implied by the model. Two methods are available to compute this matrix: Jöreskog’s method and the Finite Iterative Method. Many researchers recommend that the variances of the endogenous variables to be fixed. For instance, diagonal elements are equal to 1. As a consequence, the present paper aims to show that the two methods are identical. Furthermore, numerical studies and empirical simulations illustrating the advantages of this recommendation are also given.

Keywords: Path Analysis; Implied Correlation Matrix; Endogenous Variable; Recursive Model; Finite Iterative Method (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s11135-023-01629-4

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