Comparing the Structural Equation Model with the Simultaneous Equation Model

Generalized equation and typical application of Structural Equation Model and Simultaneous Equation Model were first introduced respectively,as well as current researching in China.Comparing the Structural Equation Model with the Simultaneous Equation Model,we pointed out several strengths of the Structural Equation Model,such as its ability to deal with the latent variables and variables with measurement error,which led to the broad application in management,psychology and other social science.Meanwhile,the comparison indicated its limitations,such as heavy requirement about sample size.Furthermore,it could not compensate for a poorly designed study and a model with specification error and was hard to interpret the parameters in structural equation model.