Instrumental Variables, Endogeneity, Regression, Linear Regression, Python.
use IVs. Developing the motivation for Instrumental Variables Consider once again the model in Eq (1): A linear model of two variables x_2 and x_3 (Image by Author) Before we begin, let’s note the following: If x_2 and x_3 are both exogenous, the OLS estimator is consistent and all coefficient