Mathematics, 30.05.2020 17:00, bri1623

Two Stage Least Squares is calculated as follows; in the first stage: A) Y is regressed on the exogenous variables only. The predicted value of Y is then regressed on the instrumental variables. B) the unknown coefficients in the reduced form equation are estimated by OLS, and the predicted values are calculated. In the second stage, Y is regressed on these predicted values and the other exogenous variables.

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Two Stage Least Squares is calculated as follows; in the first stage: A) Y is regressed on the exoge...