The finite iterative method for calculating the correlation matrix implied by a recursive path model

Abstract

Given q+p variables (q endogenous variables and p exogenous variables) and the correlation matrix among exogenous variables, how to compute the correlation matrix implied by a given recursive path model connecting these q+p variables ? A new method called Finite iterative method is introduced to perform this task. The computational efficiency of this method and the well-known Jöreskog's method is discussed and illustrated.