e) Consider the following model: Y = B + B,Y, + B,Z, +u; Assume that cov(Y,,u, )#0 and cov(Z,,u,)=0. Explain in detail how you would test the relationship between the instrumental variable : and the endogenous regressor Y, .

MATLAB: An Introduction with Applications
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ISBN:9781119256830
Author:Amos Gilat
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Chapter1: Starting With Matlab
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e)
Consider the following model:
Y = B + B,Y, + B,Z, +u;
Assume that cov( Y,,u, )± 0 and cov(Z,,u, )=0.
li>
Explain in detail how you would test the relationship between the
instrumental variable 2: and the endogenous regressor Y, .
Transcribed Image Text:e) Consider the following model: Y = B + B,Y, + B,Z, +u; Assume that cov( Y,,u, )± 0 and cov(Z,,u, )=0. li> Explain in detail how you would test the relationship between the instrumental variable 2: and the endogenous regressor Y, .
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