The LISREL method of computing explained variance for nonrecursive structural equation models is compared with alternative computational procedures. Explained variance estimates produced by LISREL are shown to be influenced by equation disturbance terms in nonrecursive models. The analysis demonstrates the need for caution in interpreting explained variance estimates in models with reciprocal feedback loops and/or errors correlated across equations.
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Teel et al. (1986) studied this question.
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