Hi List
I want to carry out structural mode. Following Example l have taken from
Basic Econometrics- Damodar Gujarati :
Advertising intensity function:
Ad/S = a0 + a1M + a2 (CD/S) + a3C + a4C2 + a5Gr + a6Dur â (1)
Concentration function:
C = b0 + b1 (Ad/S) + b2 (MES/S) -(2)
Price-cost margin function:
M = c0 + c1(K/S) + c2Gr + c3C + c4GD + c5(Ad/S) + c6 (MES/S) -(3)
where
Ad = advertising expense
S = value of shipments
C = four-firm concentration ratio
CD = consumer demand
MES = minimum efficient scale
M = price/cost margin
Gr = annual rate of growth of industrial production
Dur = dummy variable for durable goods industry
K = capital stock
GD = measure of geographic dispersion of output
Here, Equation (1) & (3) are just identified but equation (2) is
underidentified
My question is:
How to carry out 2sls? l have read rhelp wrt to 2sls, example provided
over there is
summary(tsls(Q ~ P + D, ~ D + F + A, data=Kmenta)) #
demand equation
But I still do not have clear idea how to write 2SLS command in R wrt to
the example l have mentioned .Can you help me providing the syntax wrt to
model which l have mentioned?
Regards,
Priya Saha
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