Hi
I have a system as following:
A(t)= A(t-1) + B(t-1) + C(t-1) + error(t)
B(t)= A(t-1) + B(t-1) + C(t-1) + error (t)
C(t)= A(t-1) + B(t-1) + C(t-1) + error (t)
D(t)= A(t) + B(t) + C(t)+ error (t)
In other words, all equations in the system show a lag relation except for the last equation where the relation is contemporeneous.In addition D variable does not appear in any of the first three equations. The theory underlying this is that the D variable is only affected by A, B, and C in time (t). It is stock return variable and theory assumes that the market is efficient. My aim is to estimate the impulse response fuctions (IRFs) and graph the responses of D to shocks in A, B, and C.
I understand that the system can be estimated using sur command, however, to report the IRFs, I have to estimate the system as a VAR using var command and then graph the IRFs.
My problem is in how to estimate the var while maintaining the lag and contemporeneous relationships so I can report the impulse responses after estimation??
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