Instrumental variable regression model

Reference no: EM1313174

Consider the instrumental variable regression model Y_i β₀ + β₁ X₁+ β₂ X₁+u_i, where Z_i is an instrument, Suppose that data on W_i are not available and the model is estimated omitting W_i. from the regression.

1. Suppose Z_i and W_i are uncorrelated. Is the IV estimator consistent?

2. Suppose Z_i and W_i are correlated. Is the IV estimator consistent?

Reference no: EM1313174

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