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Structural Equations and Invariance

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  • Giovanni Forchini

    (University of Surrey)

Abstract

The paper approaches structural econometric models using an algebraic approach. It shows that the invariance properties of the reduced form and the decision to exclude some of the exogenous variables from the structural equations fundamentally affect the functional form of the structural equation itself. A local approach based on Lie group theory shows that the functional form of the structural equation can be partially recovered from the invariance properties of the reduced form equations.

Suggested Citation

  • Giovanni Forchini, 2012. "Structural Equations and Invariance," School of Economics Discussion Papers 0312, School of Economics, University of Surrey.
    • Handle: RePEc:sur:surrec:0312
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    File URL: https://repec.som.surrey.ac.uk/2012/DP03-12.pdf
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    References listed on IDEAS

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