AcademicsWorking Papers

Simultaneous equations for discrete outcomes: Coherence and completeness using panel data
Andrew Adrian Pua
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Modeling jointly determined discrete outcomes via simultaneous equations require the so-called coherency condition to guarantee the existence of a unique reduced form. These conditions effectively convert a model where the endogenous variables are jointly determined into a model that is triangular or recursive. In the spirit of a suggestion by Lewbel (2007), I propose using panel data to decide how the coherency condition will hold without restricting error supports or imposing triangularity for all observations.