Factor analysis with a single common factor

Chen, Siyan and Desiderio, Saul (2018): Factor analysis with a single common factor.

Abstract

In this paper we present a simple approach to factor analysis to estimate the true correlations between observable variables and a single common factor. We first provide the exact formula for the correlations under the orthogonality conditions, and then we show how to consistently estimate them using a random sample and a proper instrumental variable.

• Item Type: MPRA Paper
• Language: English
• Keywords: Factor analysis, correlation, instrumental variable estimation
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General; C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C38 - Classification Methods ; Cluster Analysis ; Principal Components ; Factor Models

References

None.