If You Conduct Your Estimation Using Two-Stage Least Squares by Separately

question 43

Multiple Choice

If you conduct your estimation using two-stage least squares by separately estimating each regression (say in Excel) , what condition should you be aware of when interpreting your second stage results?

• A) The coefficients will be too low.
• B) The coefficients will be too high.
• C) The standard errors reported in the second stage are not accurate.
• D) The residuals do not sum to zero as they due in the first stage.

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