If we have a proxy for the capital rental rate rbt , the system is linear. The reduced form parameters can then be estimated using equation-by-equation OLS by regressing yt = (yC,t .However, the basic OLS can be extended to take into account the peculiarities of the system at hand. First, note a common term σ(Zt − Zt−∆) in the errors (eq. 3.1, 3.2). This cross-correlation can be taken care of by applying seemingly-unrelated regressions (SUR) analysis. Next, there is a possibility of endogeneity of the regressors. The authors suggest using an IV estimator to account for that