Consider the following causal equation: Yi Bo + BXi + BW + Ui where U; is...
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Consider the following causal equation: Yi Bo + B₁Xi + B₂W₁ + Ui where U; is the disturbance term, So #0, 8₁ 0 and 32 0. X, is an endogenous regressor and you have access to a single variable, Z₁, that you may be able to use as an instrument for X₁. For each of the scenarios detailed below, explain whether a 2SLS strategy using Z; to instrument for X, can be applied to consistently estimate the slope coefficients (31,82) in the causal equation. Note that the regressor W; is not omitted from the population regression function. Unless you are given information to the contrary, you can assume that all of the conditions required for the consistency of 2SLS are met. Consider the following causal equation: Yi Bo + B₁Xi + B₂W₁ + Ui where U; is the disturbance term, So #0, 8₁ 0 and 32 0. X, is an endogenous regressor and you have access to a single variable, Z₁, that you may be able to use as an instrument for X₁. For each of the scenarios detailed below, explain whether a 2SLS strategy using Z; to instrument for X, can be applied to consistently estimate the slope coefficients (31,82) in the causal equation. Note that the regressor W; is not omitted from the population regression function. Unless you are given information to the contrary, you can assume that all of the conditions required for the consistency of 2SLS are met.
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To assess whether a 2SLS TwoStage Least Squares strategy using Zi as an instrument for Xi can be app... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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