Instrumental Variables, Endogeneity, Regression, Linear Regression, Python.
y that x_2 and x_3 have not been able to “explain”. For a data set containing n rows, 1, y, x_2, x_3, ϵ are all column vectors of size [n x 1] — hence the bold notation. We’ll drop the 1 (which is a vector of 1s) from subsequent equations for brevity. If one or more regression variables, say x_3,