Title: Testing the validity of instruments in an exactly identified equation

Authors: Marco Ventura

Addresses: Italian National Institute of Statistics (ISTAT), Via Tuscolana 1788, 00173, Rome, Italy

Abstract: Whenever the number of instruments equals the number of endogenous variables testing the validity of the instruments is not a feasible task. Based on recent econometric developments (Lewbel, 2012), this paper aims at spreading among applied economists and econometricians an empirical strategy to overcome this setback, thus sidestepping the exact identification problem.

Keywords: instrumental variables; exact identification; over identifying test; Hansen-Sargan test; endogeneity.

DOI: 10.1504/IJCEE.2018.091038

International Journal of Computational Economics and Econometrics, 2018 Vol.8 No.2, pp.159 - 169

Received: 04 Aug 2015
Accepted: 10 May 2016

Published online: 23 Feb 2018 *

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