ABSTRACT

Over the past 15 years, there has been an extended discussion of the meaning and applicability of nonrecursive as distinct from recursive systems in econometrics, and throughout this discussion there has been a marked divergence of views as to the merits of the two types of models. It is not the purpose of this chapter to extend that controversy further but rather to attempt a constructive statement of the relationship between the two approaches and the circumstances under which each is applicable.