Write a Short Essay About the Overidentifying Restrictions Test

question 22

Essay

Write a short essay about the Overidentifying Restrictions Test. What is meant exactly by "overidentification?" State the null hypothesis. Describe how to calculate the J-statistic and what its distribution is. Use an example of two instruments and one endogenous variable to explain under what situation the test will be likely to reject the null hypothesis. What does this example tell you about the exactly identified case? If your variables pass the test, is this sufficient for these variables to be good instruments?

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Definitions:

Social Learning Theory

A theory that proposes individuals learn behaviors, norms, and values primarily through observing and imitating others in their society.

Identity

The way an individual sees themselves, encompassing personal traits, social affiliations, and cultural identity.

Functionalism

A theoretical perspective that sees society as a complex system whose parts work together to promote solidarity and stability, emphasizing the interrelationships of social institutions.

Conflict Theory

A concept that sees social and economic structures as instruments in the conflict among groups or classes, utilized to uphold inequality and the supremacy of the dominant class.