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Instrumental variable regression model

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Reference no: EM1313174

Consider the instrumental variable regression model Yi β0 + β1 X1+ β2 X1+ui, where Zi is an instrument, Suppose that data on Wi are not available and the model is estimated omitting Wi. from the regression.

1. Suppose Zi and Wi are uncorrelated. Is the IV estimator consistent?

2. Suppose Zi and Wi are correlated. Is the IV estimator consistent?

Reference no: EM1313174

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