[R-sig-ME] microeconometrics problem

Adam A adam.a28 at wp.pl
Sat Dec 31 13:04:12 CET 2011


Request you to all please provide me the solution for my problem.

Find the valid instruments… Variables: - the response variable for the structural equation, y - the jointly endogenous RHS variable in the structural equation, m - two control variables (x1 and x2) that will always appear on the RHS of the structural equation - four potential instrumental variables, denoted by (z1, z2, z3, z4) The problem of course, is that you have no idea if the potentional IVs are admissible. Your mission in life is to identifity those Is for which the exclusion 
restrictions are vali, and to estimate the casual effect of m on y in a linear regression on the form: y=x1alfa1+x2alfa2+mbeta+u.

#part of data
y= c( 8.52, -2.08,  3.13,  0.69, -5.98, -0.60,  0.39)
m= c( 3.46, -2.38,  1.99,  0.81, -3.43, -1.17,  0.42)
x1=c( 0.34,  0.33, -1.67, -0.75, -0.40,  0.54, -1.27)
x2=c( 1.00, -0.57,  0.99,  0.04, -1.24,  0.21,  0.68)
z1=c( 0.52, -0.56, -0.43, -0.15, -0.26, -0.49, -1.02)
z2=c( 0.22, -0.76,  0.05, -0.54, -1.41, -1.26,  0.01)
z3=c(-0.73, -0.71,  0.40,  0.45, -0.64, -0.38,  1.06)
z4=c( 2.47,  0.30,  0.76,  0.13, -0.48,  0.08, -0.43)

Thanks in advance, 
Adam




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