Refer to equations (15.19) and (15.20). Assume that it = x, so that the population variation in
Question:
(i) What is the asymptotic bias in the IV estimator?
(ii) How much correlation would have to exist between x and u before OLS has more asymptotic bias than 2SLS?
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Related Book For
Introductory Econometrics A Modern Approach
ISBN: 978-0324660548
4th edition
Authors: Jeffrey M. Wooldridge
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