6-10 4 Identification of Simultaneous equations Can We retrieve the original coefficients from the zs? Short answer: sometimes we sometimes encounter another problem: identification. x Consider the following demand and supply equations Supply equation =a+ BP(12) Demand equation Q=n+up(13) We cannot tell which is which! Both equations are UNidEntiFied or UNDERIDENTIFIED. The problem is that we do not have enough information from the equations to estimate 4 parameters. Notice that we would not have had this problem with equations (4 ) and(5) since they have different exogenous variables C Chris brooks2002,陈磊204© Chris Brooks 2002, 陈磊 2004 6-10 Can We Retrieve the Original Coefficientsfrom the ’s? Short answer: sometimes. • we sometimes encounter another problem: identification.* • Consider the following demand and supply equations Supply equation (12) Demand equation (13) We cannot tell which is which! • Both equations are UNIDENTIFIED or UNDERIDENTIFIED. • The problem is that we do not have enough information from the equations to estimate 4 parameters. Notice that we would not have had this problem with equations (4) and (5) since they have different exogenous variables. 4 Identification of Simultaneous Equations Q =  + P Q =  + P