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Thread: Static simultaneous contingency model to dynamic simultaneous equations model

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    Static simultaneous contingency model to dynamic simultaneous equations model




    Dear forum members,

    I have a task never attempted before and need some help.

    Given is a simultaneous contingency model in the following structural form (attachment: 1.png; where, X1, X2, X3, X4 are endogenous, ad X5, X6, X7 are exogenous)

    There is also a reduced form in matrix formulation (attachment: 2.png)

    How can I (theoretically) transform this static model into a dynamic one? Any help will be greatly appreciated!

    Anton
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    Last edited by kiton; 12-05-2014 at 07:16 PM. Reason: simultaneous contingency model

  2. #2
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    Re: Static simultaneous contingency model to dynamic simultaneous equations model


    Nothing is impossible if you delve in it. Done deal Long story short, the model is: Y(i) = A^2Y(i-2) + AΠX(i-1) + ΠX(i) + W(i) + AW(i-1)

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