The conditions for a valid instruments do not include the following: a. each instrument must be uncorrelated with the error term.
b. each one of the instrumental variables must be normally distributed.
c. at least one of the instruments must enter the population regression of on the 's and the 's.
d. perfect multicollinearity between the predicted endogenous variables and the exogenous variables must be ruled out.
Correct Answer:
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Q2: The TSLS estimator is
A)consistent and has a
Q3: The following will not cause correlation between
Q4: Weak instruments are a problem because
A)the TSLS
Q6: The IV regression assumptions include all
Q7: If the instruments are not exogenous,
A)you cannot
Q10: Having more relevant instruments
A)is a problem because
Q11: Consider a competitive market where the demand
Q13: When there is a single instrument
Q14: Instrument relevance a. means that the
Q16: The reduced form equation for X
A)regresses the
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