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Re: st: Question on Wooldridge's Procedure 18.1

From   "B.Gibbons" <>
Subject   Re: st: Question on Wooldridge's Procedure 18.1
Date   Thu, 2 Aug 2012 16:43:29 -0700 (PDT)

Hi Austin, I'm currently using the 18.1 method in a project and have seen
your warnings about using tests of instrument strength through the 18.1

My 1st question is whether those warnings are solely because of the
potential that the non-linearity in the probit may be correlated with the
binary endogenous variable - and falsely show good instrument strength.

2nd - what if there is both strong correlation between the non-linearity in
the probit AND strong instruments in the model: is there reason to worry
about this non-linearity as having a potential bias, especially since you
can't test the exclusion restriction for that?

Thanks for any comments, Brent

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