In Order to Statistically Verify That an Instrument Satisfies the Exclusion

question 20

Multiple Choice

In order to statistically verify that an instrument satisfies the exclusion condition, we can:

• A) Run a regression of the instrument against the dependent variable of interest.
• B) Run a regression of the instrument against the independent variable of interest.
• C) There is no way to statistically satisfy the exclusion condition.
• D) Run an overidentification test.

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Definitions:

Establish

To set up, start, found, or create something on a firm or permanent basis.

Contract Involved

Relates to situations or disputes where a formal agreement between parties, outlining duties, rights, and obligations, is central to the matter at hand.

Types of Fraud

Categories of deceitful activities intended to gain dishonest advantages, often financial in nature.

Effect

The result or outcome of a particular cause or action.