ABSTRACT
First we write out these same equations so that each of them has on its right-hand side all the variables in the path diagram. This means putting in a lot of zero coefficients, but it places the equations into a convenient form to express as matrices. For completeness, we added structural equations for A and B, although these are not very exciting because neither has any incoming causal arrows from other variables in the diagram. In each equation, the first four terms indicate causal arrows from other variables (hence the variable itself always gets a zero coefficient). The last term in each expression is the residual. Source variables such as A and B have, by definition, all of their causes external to the path diagram, so they are treated as “all residual.”
