What is the 2^nd stage of 2SLS? A)estimate parameters of reduced form equations and find predicted values B)find a random sample large enough to divide into 2 separate samples for the two stages C)estimate parameters of the structural equations using predicted values from reduced form equations D)use reduced form parameter estimates as explanatory variables

Question

Quizplus · Accepted Answer

The 2^nd stage of 2SLS refers to the second stage of two-stage least squares, where the parameters of the structural equations are estimated using predicted values from the reduced form equations. Therefore, option C is the correct choice. Option A refers to the first stage, where the parameters of the reduced form equations are estimated and predicted values are calculated. Option B is not relevant to this particular stage of 2SLS, as it pertains to sample size determination. Option D is incorrect, as the reduced form parameter estimates are used as instruments and not explanatory variables in the second stage of 2SLS.

What Is the 2nd Stage of 2SLS

What Is the 2^nd Stage of 2SLS