This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: The two conditions for instrument validity are corr(Zi, Xi) 0 and corr(Zi, ui) = 0. The reason for ... (Read 157 times)

BRWH

  • Hero Member
  • *****
  • Posts: 553
on: Jun 29, 2018
The two conditions for instrument validity are corr(Zi, Xi)  0 and corr(Zi, ui) = 0. The reason for the inconsistency of OLS is that corr(Xi, ui)  0. But if X and Z are correlated, and X and u are also correlated, then how can Z and u not be correlated?

Question 2

Earnings functions, whereby the log of earnings is regressed on years of education, years of on the job training, and individual characteristics, have been studied for a variety of reasons.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

Zebsrer

  • Sr. Member
  • ****
  • Posts: 284
Reply #1 on: Jun 29, 2018
Answer to Question 1



Answer to Question 2



BRWH

  • Hero Member
  • *****
  • Posts: 553
Reply #2 on: Jun 29, 2018
Thank you :)


Zebsrer

  • Sr. Member
  • ****
  • Posts: 284
Reply #3 on: Jun 29, 2018
Happy to help you


« previous next »
 

Did you know?

As many as 28% of hospitalized patients requiring mechanical ventilators to help them breathe (for more than 48 hours) will develop ventilator-associated pneumonia. Current therapy involves intravenous antibiotics, but new antibiotics that can be inhaled (and more directly treat the infection) are being developed.

Did you know?

Pope Sylvester II tried to introduce Arabic numbers into Europe between the years 999 and 1003, but their use did not catch on for a few more centuries, and Roman numerals continued to be the primary number system.

Did you know?

Certain topical medications such as clotrimazole and betamethasone are not approved for use in children younger than 12 years of age. They must be used very cautiously, as directed by a doctor, to treat any child. Children have a much greater response to topical steroid medications.

Did you know?

Everyone has one nostril that is larger than the other.

Did you know?

About 60% of newborn infants in the United States are jaundiced; that is, they look yellow. Kernicterus is a form of brain damage caused by excessive jaundice. When babies begin to be affected by excessive jaundice and begin to have brain damage, they become excessively lethargic.

Comparison of Selected Respiratory Conditions Comparison of Selected Respiratory Conditions
Crying Frequency in the Early Months In their first months of life, infants often cry for no appare Crying Frequency in the Early Months In their first months of life, infants often cry for no appare
HP-01 wrist instrument, 1977 HP-01 wrist instrument, 1977
Common Oral Lesions/Conditions Associated with HIV Infections and Treatment Guidelines Common Oral Lesions/Conditions Associated with HIV Infections and Treatment Guidelines
Social Conditions and Gender Social Conditions and Gender
Give the world a reason to remember your name Give the world a reason to remember your name
Video: Blood Test Basics

For a complete list of videos, visit our video library