A Necessary and Sufficient Identification Rule for Structural Models Estimated in Practice

A straightforward classification system is presented that is a necessary and sufficient condition for identification of the structural component of structural equation models of the type most commonly estimated - block-recursive models with no more than two equations per block.

Abstract

This article presents a straightforward classification system that is a necessary and sufficient condition for identification of the structural component of structural equation models of the type most commonly estimated - block-recursive models with no more than two equations per block. The technique is graphical and thus does not require actual estimation of the model in question. The article also reviews the limitations of other identification techniques, including econometric and information matrix techniques, when applied to these models.