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Suppose You Are Trying to Estimate the Following Regression: Yi

question 7

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Suppose you are trying to estimate the following regression: Yi = β0 + β1X1i + β2X2i + β3X3i + Ui, with an instrument for Zi for X2i. All of the following variables will be included (on the right- and left-hand side of this regression) in the second stage of two-stage least squares except for which one?


Definitions:

Probability

The measure of the likelihood that an event will occur, quantified as a number between 0 and 1.

Null Hypothesis

The default hypothesis that there is no effect or no difference, and it is tested against an alternative hypothesis.

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Credit cards are financial instruments issued by banks allowing cardholders to borrow funds at point of sale, subject to the agreement to pay back the borrowed amount plus any applicable interest.

Alternative Hypothesis

A statement that proposes a relationship between variables, opposite to the null hypothesis, indicating a significant effect or difference.

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