Construction of Semi-Parametric Simultaneous Equation Models with An Application
DOI:
https://doi.org/10.37375/esj.v9i2.4396Abstract
This research aims to construct a semi-parametric simultaneous equation model with internal variables, then reduce, characterize, and estimate the model using kernel estimators and the least squares method in two stages. This provides a statistical framework for addressing the problem of internal homogeneity and nonlinear relationships in semi-parametric simultaneous equation models. Consumption, GDP, money supply, and government spending data for the Iraqi economy were used to implement the model. The results showed the model's superiority in detecting sharp structural changes and tracking sudden shocks. The estimated parameters demonstrated a strong nonlinear behavioral response to consumption and a significant positive impact of fiscal and monetary policy tools. The randomness of errors and the statistical validity of the estimated inference model were confirmed through residual analysis.
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