Which of the Following Statements Is Incorrect

question 12

Multiple Choice

Which of the following statements is incorrect?

• A) Equations that are part of a recursive system can be validly estimated using OLS
• B) Unnecessary use of two-stage least squares (2SLS) - i.e. on a set of right hand side variables that are in fact exogenous - will result in consistent but inefficient coefficient estimates.
• C) 2SLS is just a special case of instrumental variables (IV) estimation.
• D) 2SLS and indirect least squares (ILS) are equivalent for over-identified systems.