Question

1. State if each of the following statements is true or not, and BRIEFLY give your rea- soning. (3 sentences maximum for each question) (a) The 2SLS estimator cannot have a larger asymptotic bias than OLS. (3 marks) (b) Hausman test for overidentification has a x2 distribution asymptotically with a degree of freedom that is equal to the number of exogenous variables in the data. (3 marks) (c) Proxy variable and instrumental variables can sometimes be used interchangeably (3 marks)

Answer 1

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