The variable x can be written in terms of a dummy instrumental variable z as, = + + where ( | ) = . Find ( | = ). ( | = ) = [( + + ) | = ] = ( | = )...
Having solved A + B, Solve C (Answer to A & B) is attached and to the tutor who answered it *tip this time!
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a. The variable x can be written in terms of a dummy instrumental variable z as, = + + where ( | ) = .Find ( | = ).( | = ) = [( + + ) | = ]= ( | = ) + ( | = ) + ( | = )= + ( | = ) + [ ( | ) = ]= + () [ ( | = ) = ]= Find ( | = ).( | = ) = [( + + ) | = ]= ( | = ) + ( | = ) + ( | = )= + ( | = ) + [ ( | ) = ]= + () [ ( | = ) = ]= + = ( + ) − = ( | = ) − ( | = )b. Consider the simple regression of y on z, = + + From the sample data it was obtained that, ̅) =∑( − ̅)( − = ( − )(̅ − ̅ ) ∑( − ̅) == ( − ) The OLS estimator for the slope of the above simple regression equation of y on z is,̂ = ∑=( − ̅)( − ̅)∑=( − ̅) ( − )(̅ − ̅ )= (− ) ̅ − ̅ )= (
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