Dear Listers,
I am not understanding the difference between manually doing a 2SLS and
letting Stata do it with xtivreg.
I estimated each of 2 endogenous variables separately, saving the predicted
values:
xtreg srev2 unemp pctmdcaid pctprsner gsp2 popgrow
. predict srevhat
(option xb assumed; fitted values)
. xtreg lrev2 pcy1 tel pctschkid pctincpcrime taxbur
. predict lrevhat
(option xb assumed; fitted values)
Then I ran my regression using the predicted values for the endogenous
variables:
. xtreg staid2 srevhat lrevhat fdstss2 fdstot2 fedss2 fedoth2 lbal
The result I get is completely different than if I use:
xtivreg staid2 fdstss2 fdstot2 fedss2 fedoth2 lbal (srev2 lrev2 = unemp
pctmdcaid pctprsner gsp2 popgrow pcy1 tel pctschkid pctincpcrime taxbur
fdstss2 fdstot2 fedss2 fedoth2 lbal)
What is the difference and how do I know which result is correct?
Stephanie
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