Which of the Following Is True of Two Stage Least

question 8

Multiple Choice

Which of the following is true of two stage least squares estimators?

• A)The two stage least squares estimator is equal to the instrumental variable estimator if R² is equal to 1.
• B)The two stage least squares estimators are biased if the regression model exhibits multicollinearity.
• C)The two stage least squares estimators have lower variance than the ordinary least squares estimators.
• D)The two stage least squares estimators have large standard errors when R² lies close to 0.

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