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Notes on Identication Mostly From Gujarati, Basic Econometrics, Chapter 19 Copyright - Jonathan Nagler; April 11, 2001 Un-identied: We cannot determine the values of the parameters of the mo del based on what we observe (i.e., based on the data the mo del generates). The mo del describ es how the data are generated (or how the endogenous variables are generated). An unidentied mo del is not identied even if it generates an innite amount of data. 1 Endogenous Variables: These are `jointly dep endent variables; or, those determined within the system of equations. Exogenous Variables: Determined Outside the System of Equations. Some- times called predetermined. Lagged endogenous variables are treated as exoge- nous, or pre-determined. This only holds if u are t not serially correlated. Structural Mo del: This is the mo del we start with. Its parameters are the structural parameters. Also called the b ehavioral mo del. Reduced Form Equations: These are derived from the structural equations. They express the endogenous variables solely as function of exogenous variables and disturbances. We can estimate the reduced form co eÆcients with OLS. 2 Structural Mo del: C =  +  Y +  t 0 1 t t