Hi folks,
I am reading -reg3- in the Stata manul, specifically Example 1 from Klein (1950).
In this example, consumption impacts private wages and vice versa.
Consider another hypothetical endogeneity, for example, government wage also impacting consumption.
In this hypothetical question, we would need two more specifications of government wage as a function of private wage and consumption.
Question 1) So would having total 4 equations enough to identify the partial effect of government wage in all equations?
Question 2) Can -reg3- handle this additional simultaneity?
I am reading -reg3- in the Stata manul, specifically Example 1 from Klein (1950).
Code:
use https://www.stata-press.com/data/r18/klein, clear reg3 (consump wagepriv wagegovt) (wagepriv consump govt capital1)
Consider another hypothetical endogeneity, for example, government wage also impacting consumption.
In this hypothetical question, we would need two more specifications of government wage as a function of private wage and consumption.
Question 1) So would having total 4 equations enough to identify the partial effect of government wage in all equations?
Question 2) Can -reg3- handle this additional simultaneity?
