This paper utilizes the results of Kruskal (1968), Zyskind (1967), and more recently Milliken and Albohali (1984) to derive a simple necessary and sufficient condition for 3SLS to be equivalent to 2SLS. This condition depends upon the inverse of the variance:covariance matrix of the disturbances, and the set of second stage regressors of each structural equation. More importantly, this condition should prove useful for econometric students and provides an easy method for checking sufficiency.
- Necessary and sufficient Conditions for Equivalence
- Simultaneous equation model
- Two-Stage and Three-Stage Least Squares
ASJC Scopus subject areas
- Economics and Econometrics