Instrument Relevance A $X$ And $u$ Are Correlated And $Z$ And $u$ Are Not Correlated

question 27

Short Answer

Instrument relevance a. means that the instrument is one of the determinants of the dependent variable.
b. is the same as instrument exogeneity.
c. means that some of the variance in the regressor is related to variation in the instrument.
d. is not possible since $X$ and $u$ are correlated and $Z$ and $u$ are not correlated.

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Definitions:

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A quantified financial analysis technique used to predict the overall outcome of a decision under uncertainty by multiplying possible outcomes by their probabilities and summing those values.

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The strategy of sourcing materials or products from a variety of suppliers to reduce risk and increase reliability in the supply chain.

Lowest Bid

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Suppliers

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