6-6 2 Simultaneous Equations Bias But what would happen if we had estimated equations( 4)and (5),i.e the structural form equations, separately using Ols? Both equations depend on P. One of the ClrM assumptions was that E(Xu)=0, where X is a matrix containing all the variables on the rhs of the equation. It is clear from(8)that P is related to the errors in(4)and (5) i.e. it is stochastic What would be the consequences for the ols estimator, B, if we ignore the simultaneity? C Chris brooks2002,陈磊204© Chris Brooks 2002, 陈磊 2004 6-6 • But what would happen if we had estimated equations (4) and (5), i.e. the structural form equations, separately using OLS? • Both equations depend on P. One of the CLRM assumptions was that E(Xu) = 0, where X is a matrix containing all the variables on the RHS of the equation. • It is clear from (8) that P is related to the errors in (4) and (5) - i.e. it is stochastic. • What would be the consequences for the OLS estimator, , if we ignore the simultaneity? 2 Simultaneous Equations Bias  