I am planning on running a 3 equation simultaneous equation model where each of the dependent variables depend on each other (i.e. Y1 is based on Y2 and Y3; Y2 is based on Y1 and Y3; Y3 is based on Y1 and Y2).
I came across the method of 3SLS but I can't find much information on its applicability.
When is it appropriate to use 3SLS instead of 2SLS (what are the assumptions underlying 3SLS)? And what are the benefits and drawbacks of using 3SLS over 2SLS? If you could explain in very basic terms, that would be great!