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Misspecification in Simultaneous Systems: An Alternative Test and Its Application to a Model of the Shrimp Market

Published online by Cambridge University Press:  28 April 2015

J. D. Lea  and
J. S. Shonkwiler
J. D. Lea
Affiliation:
Department of Agricultural Economics, Kansas State University
J. S. Shonkwiler
Affiliation:
Food and Resource Economics Department, University of Florida
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Abstract

Concern over the effects of public policies based on misspecified econometric models motivates interest in a procedure to test, diagnose, and improve the specification of models that have been estimated with three-stage least squares. A test of system-wide specification based on Hausman's specification test is employed in a test of the a priori restrictions placed on the parameters of a structural model of the U.S. shrimp market. The null hypothesis of proper specification is rejected. After diagnosis via a comparison of unrestricted and restricted reduced forms and respecification, the null hypothesis cannot be rejected.

Keywords

misspecification testeconometric modelsreduced formspolicyshrimp
Type
Submitted Articles
Information
Journal of Agricultural and Applied Economics , Volume 20 , Issue 2 , December 1988 , pp. 65 - 72
Copyright
Copyright © Southern Agricultural Economics Association 1988

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