Dear all,

I am trying to estimate simultaneous equation model concerning growth in russian regions.
I run the analysis by means of FIML in R sem package.
I am not familiar with SEM yet, but I've just got several suitable estimated specifications.
Nevertheless, sometimes R gives the following warning message:

Warning message:
Negative parameter variances.
Model is probably underidentified.
 in: sem.default(ram = ram, S = S, N = N, param.names = pars, var.names = vars,  

I check for rank condition - all three equations in the system are turned out to be exact...

Does anybody know what it means? and how to handle with that problem?

P.S.
Do you know any examples of models estimated in SEM by means of FIML, incorporating spatial lag on endogenous variable?

Thanks, in advance

Denis Fomchenko
research fellow
Department for Economic Development Problems
Institute for the Economy in Transition
5, Gazetny lane, Moscow 125993, Russia
e-mail: fomchenko@iet.ru
http://www.iet.ru
 

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