Suppose You Are Trying to Estimate the Following Regression: Y_i

question 1

Multiple Choice

Suppose you are trying to estimate the following regression: Y_i = β₀ + β₁X_1i + β₂X_2i + β₃X_3i + U_i, with an instrument for Z_i for X_2i. All of the following variables will be included (on the right- and left-hand side of this regression) in the first stage of two-stage least squares except for which one?

• A) X_1i
• B) X_2i
• C) X_3i
• D) Y_i

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Definitions:

Equity

Equity refers to the ownership interest in a company or property, representing the value that would be returned to shareholders or owners after discharging all liabilities.

Residence

A place where a person lives or intends to return to as their home, often used for legal or taxation purposes.

Reaffirmation Agreement

A legal document signed by a debtor agreeing to continue paying a dischargeable debt after bankruptcy, typically to retain collateral.

Discharged

Released from an obligation, duty, or debt; often used in legal and financial contexts to indicate full payment or completion.