\documentclass{article}
\usepackage{com.braju.graphicalmodels}
\usepackage{amsmath}
% \special{papersize=40mm,80mm}
% \setlength{\pdfpagewidth}{40mm}
% \setlength{\pdfpageheight}{80mm}
% \usepackage[vcentering,dvips]{geometry}
% \geometry{papersize={80mm,120mm},total={80mm,120mm},margin=0mm}



\catcode`\@=11%

\pagestyle{empty}

\begin{document}
\TeXtoEPS

\LARGE
\psset{unit=10mm,arrowscale=1.5,linewidth=1.5pt}

\begin{pspicture}(0,0)(4,2)
  \SpecialCoor

  \rput(1.0,1.0){\GM@node{x}} \GM@label[angle=90]{x}{$x$}
  \rput(3.0,1.0){\GM@node[observed=true]{y}} \GM@label[angle=90]{y}{$y$}
  \rput(1.6,1.3){\rnode{dummy1}{}}
  \rput(1.6,1.6){\rnode{dummy2}{}}       
       
  \ncline{->}{x}{y}
  \ncloop[angleA=0,angleB=0,loopsize=1,arm=0.7,linearc=0.2]{->}{dummy1}{dummy2}
       
\end{pspicture}

\endTeXtoEPS
\end{document}