Estimating Nonlinear Structural Models: EMM and the Kenny–Judd Model

Abstract

The estimation of nonlinear structural models is not trivial. One reason for this is that a closed form solution of the likelihood may not be feasible or does not exist. We propose to estimate nonlinear structural models using the efficient method of moments, as generating data according to the models is often very easy. A simulation study of the interaction model of Kenny–Judd shows promising results, for example, the bias of the parameter for the interaction effect is less for the efficient method of moments compared to quasi-maximum likelihood (QML) and characteristic function estimator (CFE) (Blom & Christoffersson 2001) and comparable to latent moderated structural equations (LMS) (Schermelleh-Engel, Klein, & Moosbrugger, 1998).