Hi List
l am interested in developing price model. I have found a research paper
related to price model of corn in US market where it has taken demand &
supply forces into consideration. Following are the equation:
Supply equation:
St= a0+a1Pt-1+a2Rt-1+a3St-1+a5D1+a6D2+a7D3+U1 -(1)
Where D1,D2,D3=Quarterly Dummy Variables(Since quarterly data are
considered)
Here, Supply equation has 1 endogenous (St) & 6 exogenous variables (P
t-1,Rt-1,St-1,D1,D2,D3)
Demand Side:
Demand of corn is divided into 3 equations:
Feed equation:
Ft=b0+b1Pt+b2P(sm)t+b3Bt+b4COFt+b5Ht+a6D1+a7D2+a8D3+U2 -(2)
here there are 2 endogenous variable(Ft, Pt) & 7 exogenous variables
(P(sm)t,Bt,COFt,D1,D2,D3)
Export equation:
EXt= c0+c1Pt+c2EXt-1+c3Wt+c4DXt+c5GDPt+c6D1+c7D2+c8D3+U3 -(3)
here there are 2 endogenous variable(EXt, Pt) & 7 exogenous variables (EX
t-1,Wt,DXt,D1,D2,D3)
Food, Alcohol, Industry (FAI) Demand Equation:
FAIt= d0+d1Pt+d2Etht+d3Popt+d4Tt+d5D1+d6D2+d7D3+U4 -(4)
here there are 2 endogenous variable(FAIt, Pt) & 6 exogenous variable(Eth
t,Popt,Tt,D1,D2,D3)
Price Equation: price of corn is determined by supply and demand
simultaneously, following is the reduced form equation:
Pt=µ0+µ1St+µ2Ft+µ3EXt+µ4FAIt+µ5Pt-1+µ6D1+µ7D2+µ8D3+U5 -(5)
here there are 5 endogenous variable(St, Ft,EXt, FAIt, Pt) & 4 exogenous
variable(Pt-1,D1,D2,D3)
Now my question is :
By applying 3SLS in the price equation, it will show the impact of
variables on Pt which are mentioned in equation (5).But if l want to find
impact of ETHt from equation (4) on Pt , l'll have to substitute equation
(1),(2),(3),(4) in price equation(5), which manually becomes very tedious,
is there any way this could be done directly in R?
Thanks in advance
Regards,
Priya Saha
.
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