(a) (i) Why is the presence of endogeneity such an important issue in economic analysis? (10...
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(a) (i) Why is the presence of endogeneity such an important issue in economic analysis? (10 Marks) (ii) What is an instrumental variable (IV)? Give an example of an instrumental variable that could be used to solve a simultaneity problem between two variables and explain why it is valid. (5 Marks) (iii) What is meant by the rank condition in IV estimation? What other crucial conditions exist for successful IV estimation? (5 Marks) (a) (i) Why is the presence of endogeneity such an important issue in economic analysis? (10 Marks) (ii) What is an instrumental variable (IV)? Give an example of an instrumental variable that could be used to solve a simultaneity problem between two variables and explain why it is valid. (5 Marks) (iii) What is meant by the rank condition in IV estimation? What other crucial conditions exist for successful IV estimation? (5 Marks)
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i The presence of endogeneity is a significant issue in economic analysis because it violates the as... View the full answer
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Personal Finance Turning Money into Wealth
ISBN: 978-0134730363
8th edition
Authors: Arthur J. Keown
Posted Date:
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