Application Of Principal Component Estimators To A Simultaneous Equation Model Of Nigerian Economy

Abstract

Six instrumental variable estimators are used to obtain consistent estimates of the structural parameters of a model developed for Nigeria economy called MAC III model. The performances of the estimators were ranked using Friedman test statistics based on four criteria namely: Root Mean Square Error (RMSE), Theils inequality coefficients, Bias and variance proportions. The result of this ranking show that the six (6) estimators rank differently or vary in performances. Based on this study, the preference ordering of the estimators is: 2SP₁C₄, 2SP₂C₄, 2SP₁C₅, 2SP₂C₅, 2SP₂C₆ and 2SP₁C₆.

KEY WORDS: Principal Component, Simultaneous, Model, Economy.

Global Journal of Pure and Applied Sciences Vol.11(1) 2005: 113-119