Why Is It Best to Use Specialized Software to Estimate $\tau$

question 8

Multiple Choice

Why is it best to use specialized software to estimate 2SLS?

• A)specialized t-values are needed for inference and hypothesis testing
• B)the \( \tau \)distribution is not widely available otherwise
• C)it is algebraically difficult to find structural parameter estimates from reduced form estimates,so the software needs to use specialized algorithms when algebra does not work
• D)it is too easy to make a data handling mistake when capturing predicted values to use as regressors in the second stage

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