Simultaneous Equation Bias
The OLS and other single equation models assume that variables treated as independent variables are exogenous. This implies a one-way relationship between independent and dependent variables. It is assumed that…
The OLS and other single equation models assume that variables treated as independent variables are exogenous. This implies a one-way relationship between independent and dependent variables. It is assumed that…
The Two-Stage Least Squares or 2SLS is used to estimate simultaneous equation models or system of equations. Moreover, 2SLS uses a single equation approach. That is, each equation in the…
The Durbin-Wu-Hausman Test of Endogeneity is used to determine whether the endogenous regressors in a simultaneous equation model are truly endogenous. Simultaneous equation models include both endogenous and exogenous variables.…