Nonrecursive Causal Models

Where an assumption of unidirectionality in causal effects is unrealistic, 'recursive' models cannot be used, and more complex 'nonrecursive' models are necessary. Unfortunately, many nonrecursive models (unlike recursive models) are 'unidentified', which makes meaningful parameter estimation impossible. Even when they are identified, it would be inappropriate to use OLS regression techniques (appropriate for recursive models) for the purpose of estimation. The concept of identification, and …