In Practice, the Most Difficult Aspect of IV Estimation Is

question 27

Multiple Choice

In practice, the most difficult aspect of IV estimation is

• A)finding instruments that are both relevant and exogenous.
• B)that you have to use two stages in the estimation process.
• C)calculating the J-statistic.
• D)finding instruments that are exogenous. Relevant instruments are easy to find.

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Definitions:

Loanable Funds

The total supply of money available for borrowing or spending in the economy, including savings and investments.

Medicare

A federal health insurance program in the United States for people aged 65 and older, and for some younger people with disabilities.

Loanable Funds

The funds available for borrowing in the financial markets, determined by the savings of households and institutions.

Interest Rates

The cost of borrowing money or the return on savings, typically expressed as a percentage of the principal amount annually.