-10-


where

 -1
 D = (r- )' I


and W represents the block diagonal matrix such that the ith block

of W is

 Wi = plim (X'X)-Ix'(Yi Xi).

 The importance of obtaining the restricted reduced form parameters

and their estimated variances will become clear when the varying para-

meter recursive model is set forth. The other measures developed are

traditionally estimated and reported in most studies. The method

adopted by Schmidt for obtaining E is particularly attractive due to

its ease of implementation. This method,however,is based on the original

Goldberger, et al. approach which is a Taylor series approximation

based on large sample theory (Dhrymes).

 To incorporate a first order Markov process as a parameter variation

 scheme, the recursive structural model may be written as2

 Vec(YT) = ZTAT + Vec(nT) ATVec(UT) (21)

 which introduces the structure of expression (4) to the system in

 (17). The matrix AT is a block diagonal matrix whose ith block would
 th
 be AiT and would correspond to UiT, the partition of UT for the i

 equation. Again, the full model may be expressed

 Vec(YT) = ZTAT + VT (22)