Which of the following best characterizes the conditions for a good instrument? A. Z needs to be included in both stages in order for 2SLS to be appropriate. B. Z is statistically significant in the first-stage and exerts a direct effect on Y. C. Z is statistically significant in the first-stage and exerts no direct effect on Y. D. Z is uncorrelated with both X and Y.

Which of the following best characterizes the conditions for a good instrument? A. Z needs to be included in both stages in order for 2SLS to be appropriate. B. Z is statistically significant in the...

Which of the following best characterizes the conditions for a good instrument?

	A.	Z needs to be included in both stages in order for 2SLS to be appropriate.
	B.	Z is statistically significant in the first-stage and exerts a direct effect on Y.
	C.	Z is statistically significant in the first-stage and exerts no direct effect on Y.
	D.	Z is uncorrelated with both X and Y.

Jun 09, 2022

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