Simultaneous-Equation Regression Analysis of Sales and Advertising

Abstract
A simultaneous-equation regression model is developed and tested against aggregative time series data. The test involves the model as well as hypotheses regarding the structural parameters. Restrictions on the structural parameters imply limits on the parameters of the reduced-form equations. Estimates of the reduced-form coefficients must fall within the implied intervals in order for the model to be in agreement with the data.

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