Consider the regression modely_i = \beta_1 + \beta_2 x_{2i} + \beta_3 x_{3i} + e_i wherex_{3i} is endogenous andx_{2i} is exogenous. Two potential instruments,z_{1i} andz_{2i} are available.Openthis data setin Gretl and estimate the model using the 2SLS approach and both instruments.
In order to get full marks for this question, you will need to estimate the first stage regression and the second stage regression separately using the OLS procedure.
(a) Enter the estimate of the intercept term of the first stage regression in the box below (rounded to 3 decimal places)
(b) Enter the 2SLS estimate of\beta_1 in the box below (rounded to 3 decimal places).
(c) Do you think the instruments are weak or strong?
Enter the statistic upon which you based your answer to (c) in the box below (rounded to 2 decimal places).
