Factor analysis with a single common factor

Siyan Chen and Saul Desiderio

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper we present a simple approach to factor analysis to estimate the true correlations between observable variables and a single common factor. We first provide the exact formula for the correlations under the orthogonality conditions, and then we show how to consistently estimate them using a random sample and a proper instrumental variable.

Keywords: Factor analysis; correlation; instrumental variable estimation (search for similar items in EconPapers)
JEL-codes: C1 C38 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-ecm and nep-ets
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:90426

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