Bayesian Full Information Structrual Analysis : Springer : 9783540054177 : 3540054170 : 01 Jan 1971 : 1 1. Statement of the problem. Bayes' theorem provides a very powerful tool for statistical inference, especially when pooling information from different sources is appropriate. Thus, prior information resulting from economic theory and/or from previous (real or hypothetical) samples can be combined with the information embodied in new observations; and this operation can be performed formally, within a rigorous mathematical framework. To introduce the Bayesian analysis of the simultaneous equations model, we shall base our presentation in the very convenient exposition given by Dreze in his presidential adress to the . S' 2 C f Second World ongress 0 the Econometr1c oC1ety. The Bayesian method in statistics is usually presented as follows Consider the joint probability density function f(x.e) defined on the product space X x9, where X = {x} denotes the sample space, and e = {e} denote