Suppose that you are interested in estimating the causal effect of X on Y; however, you areworried that your right-hand-side variable X is endogenously determined with your outcomevariable Y. Further suppose that you have another variable Z that has the potential to be agood instrumental variable for X.Which of the following statements best describes how an instrument Z can be used to identifythe causal effect of Xon Y?The instrument Z can serve as a proxy for the omitted variable that is causing the endogeneity problem.The instrument Z isolates the exogenous variation in X from the endogenous variation in X.O The instrument Z cannot be used to identify the casual effect of X on Y because there is no solution tothe endogeneity problem.The instrument Z can act as an additional right-hand-side variable and control for the endogeneityproblem.

In the social sciences, making causal conclusions about sensitive and unachievable mindful objects…

Suppose that you are interested in estimating the causal effect of X on Y; however, you are worried that your right-hand-side variable X is endogenously determined with your outcome variable Y. Further suppose that you have another variable Z that has the potential to be a good instrumental variable for X . Which of the following statements best describes how an instrument can be used to identify the causal effect of Xon Y? O The instrument Z can serve as a proxy for the omitted variable that is causing the endogeneity problem. O The instrument Z isolates the exogenous variation in X from the endogenous variation in X. The instrument Z cannot be used to identify the casual effect of X on Y because there is no solution to the endogeneity problem. O The instrument Z can act as an additional right-hand-side variable and control for the endogeneity problem.

Suppose that you are interested in estimating the causal effect of X on Y; however, you are worried that your right-hand-side variable X is endogenously determined with your outcome variable Y. Further suppose that you have another variable Z that has the potential to be a good instrumental variable for X . Which of the following statements best describes how an instrument can be used to identify the causal effect of Xon Y? O The instrument Z can serve as a proxy for the omitted variable that is causing the endogeneity problem. O The instrument Z isolates the exogenous variation in X from the endogenous variation in X. The instrument Z cannot be used to identify the casual effect of X on Y because there is no solution to the endogeneity problem. O The instrument Z can act as an additional right-hand-side variable and control for the endogeneity problem.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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