I'm trying to estimate Almost Ideal Demand Systems using sureg. For
this I impose a few constraints to be in consistent with the theory.
Despite all my efforts to ensure that there is no redundancy, stata
shows: redundant or inconsistent constraints! If it's just redundant,
I can re-check the constraints and eliminate it. But I've already done
that. So, is this because my dataset does'nt probably obey these
constraints, making them inconsistent? In this case, how can I proceed
further? Is there any other way of tackling this problem, by testing
for consistency and redundancy of constraints?
Any demand system is a textbook example of a set of linear equations
which will yield a singular covariance matrix of the errors due to
adding-up conditions. If you have N goods in your demand system, are
you trying to estimate all N equations? That will not work in sureg,
since the "Zellner step" requires that the covariance matrix of
errors have full rank.
