The Variance of Coefficient Estimates in 2SLS Is Generally Smaller

question 5

True/False

The variance of coefficient estimates in 2SLS is generally smaller than the variance of coefficient estimates in OLS.

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Definitions:

Indicator Variables

Indicator variables, also known as dummy variables, are used in statistical models to encode categorical data into binary form for analysis.

Indicator Variables

These are binary variables in a statistical model that take on values of 0 or 1 to indicate the absence or presence of a specific characteristic or attribute.

Omitted Category

In statistical modeling, it refers to a category or group within a variable that is excluded from analysis, often serving as a baseline against which other categories are compared.

Dummy Variables

Numerical variables used in regression analysis to represent subgroups of the sample in a binary form.