The indeterminacy of variables in a structural equation model - a path
model with latent variables - is considered. It is shown that when th
e variables in the structural model are all manifest, the error-terms
- disturbances - are uniquely determined given the parameters and the
data; when the variables in the structural model are all latent, the e
rror-terms have indeterminate components that are simple linear transf
ormations of the indeterminate components of the common factor model;
and when they are mixed, a sufficient condition for the error-term ass
ociated with a manifest variable to be uniquely determined is that the
re is no directed path to it from a latent variable. Moreover, for err
or-terms that are indeterminate due to the effects of latent variables
it is demonstrated that error-term analysis along the lines of residu
al analysis can be employed by the use of suitable estimates of the la
tent variables.