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ILS / Indirect Least Squares
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Definition of ILS / Indirect Least Squares: ILS stands for Indirect Least Squares, an approach to the estimation of simultaneous equations models. Steps:

  1. Rearrange the structural form equations into reduced form
  2. Estimate the reduced form parameters
  3. Solve for the structural form parameters in terms of the reduced form parameters, and substitute in the estimates of the reduced form parameters to get estimates for the structural ones.

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