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Understanding Recursive vs Non-Recursive Models by Tram Anh is a document available to read on EtoBox.
1. Recursive models have uni-directional causal effects and uncorrelated disturbances, while non-recursive models contain feedback loops and reciprocal effects. 2. Non-recursive models are more flexible but can be difficult to identify and require additional variables for consistent estimation of parameters. 3. Instrumental variables can be used to identify endogenous regressors in non-recursive models, but the IV must directly cause the endogenous variable and not be correlated with the error term.
- Author
- Tram Anh
- Language
- EN