[R] Systemfit with structural equations and cross equation parameter interaction

Arne Henningsen arne.henningsen at googlemail.com
Sat Apr 7 16:48:24 CEST 2012

Dear Waseem

On 7 April 2012 09:20, waseem ahmad <waseemqaz at yahoo.com> wrote:
> I want to estimate simultaneous equation model with panel data.
> The model looks as follows
> Y1=a0+a1*X1+a2*X2
> Y2=b0+b1*X2+b2*X1
> X1=Z1-(Y1/a1)
> X2=Z2-(Y2/b1)
> I
> In this model Y1, Y2, X1 and X2 are endogenous variables;
> Z1, Z2 are exogenous variables and a0, a1, a2, b0, b1 and b2
> are parameters. Could any one please help me how to estimate
> this model in R. Thanking you in anticipation

Please note that your third and fourth equations are non-linear in
parameters. For information on estimating systems of non-linear
equations with the systemfit package, please take a look at the FAQ
section of systemfit's website:


Best wishes,

Arne Henningsen

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