Empirical Project 1 Endogeneity and IV
1. Come up with an interesting problem to discuss. Explain the theoretical framework and gather the data.
2. Estimate the empirical model by OLS and explain why you expect one or more of your regressors to be endogenous.
3. Comment on the direction of the potential bias.
4. Find an appropriate instrumental variable (one or more) and discuss their theoretical validity.
5. Estimate the model by IV. Interpret and compare the results with the OLS estimates.
6. Verify whether your instrument(s) are valid.
7. Check whether the endogenous regressor truly is endogenous.
Prepare 10 mins presentation of your results.
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