This condition is based on a counting rule of the variables included and excluded from the particular equation. It is a necessary but no sufficient condition for the identification of an equation. The order condition may be stated as follows.

For an equation ts be identified the total number of variables (endogenous and exogenous) excluded fiom it must be equal to or greater than the number of endogenous variables in the model less one. Given that in a complete model the number of endogenous variables is equal to the number of equations of the model.