Instrumental Variables, Endogeneity, Regression, Linear Regression, Python.
the above equation, γ_3 captures not just the effect of z_3 on x_3, but also x_2 on x_3. We may want to isolate out the effect of x_2 on x_3 so that the main effect of z_3 on x_3 shows through. For that, we must regress x_3 not just on z_3, but also on both x_2: x_3 expressed as a linear