** by Gösta
Hägglund**

** Research
Report 1994:6**

Department of Statistics, Stockholm University, S-106 91 Stockholm, Sweden

**Abstract**

The specification of the reference
variables in the **FABIN** - methods is studied. First some theoretical
aspects are considered. These are based on the presentation in Hägglund
(1993). Here upper bounds for the number of possible parameter (or estimation)
sets under different assumptions is discussed. This is clearly associated
to the reference variables. Moreover, some extreme cases are described.
Then, some real, performed factor analyses are viewed. There, the possibilities
of choosing appropriate reference variables on substantive grounds is discussed.
These analyses together with some previously performed analyses serve as
the basis for a numerical study. There it is concluded that the **FABIN**
- methods seem to have a certain degree of robustness against less appropriate
specifications of the reference variables. However, using one or more inappropriate
reference variables make the pattern difficult to interpret. Connected
to this is factor correlations becoming fairly large.

**Key words:** factor analysis,
instrumental variables, reference variables.

*Last update: 990916/CE*