Reduced Form
In statistics, and particularly in econometrics, the reduced form of a system of equations is the result of solving the system for the endogenous variables. This gives the latter as a function of the exogenous variables, if any. In econometrics, "structural form" models begin from deductive theories of the economy, while "reduced form" models begin by identifying particular relationships between variables.
Let Y and X be random vectors. Y is the vector of the variables to be explained (endogeneous variables) by a statistical model and X is the vector of explanatory (exogeneous) variables. In addition let be a vector of error terms. Then the general expression of a structural form is, where f is a function, possibly from vectors to vectors in the case of a multiple-equation model. The reduced form of this model is given by, with g a function.
Read more about Reduced Form: Structural Form, Reduced Form, Structural and Reduced Forms With An Exogenous Variable, The General Linear Case, Transformation
Famous quotes containing the words reduced and/or form:
“Realism, whether it be socialist or not, falls short of reality. It shrinks it, attenuates it, falsifies it; it does not take into account our basic truths and our fundamental obsessions: love, death, astonishment. It presents man in a reduced and estranged perspective. Truth is in our dreams, in the imagination.”
—Eugène Ionesco (b. 1912)
“The opera isn’t over till the fat lady sings.”
—Anonymous.
A modern proverb along the lines of “don’t count your chickens before they’re hatched.” This form of words has no precise origin, though both Bartlett’s Familiar Quotations (16th ed., 1992)