Consider the instrumental variable regression model Yi = ?0 + ?1Xi + ?2Wi + ui where...

Consider the instrumental variable regression model Yi = ?0 + ?1Xi + ?2Wi + ui where Xi is correlated with ui and Zi is an instrument.

Suppose that the first three assumptions in Key Concept 12.4 are satisfied. Which IV assumption is not satisfied when:

(a) Zi is independent of (Yi , Xi , Wi)?

(b) Zi = Wi?

(d) Zi = Xi?

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Expert Solution

Rahul Sunny answered 1 year ago

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