you need a valid instrument to test endogeneity, by then comparing the exo and endo. estimates vai the durbin-wu-hausman test that is reported after ivreg2. if one does not have valid instruments, one is in trouble. one must rely on some other identification story such as a difference-in-differences, or diff-in-diffs-in-diffs.
dann
-----Original Message-----
From: Asiedu, Elizabeth [mailto:[email protected]]
Sent: Tue 5/27/2003 9:40 AM
To: '[email protected]'
Cc:
Subject: st: Endogeneity in a Panel Setting (Fixed Effects)
Dear all,
I have an unbalanced panel of 91 countries over the period 1984-2000 (1024
observations) and I'm using the fixed effects estimation, because it failed
the Hausman test. I have two questions:
1. How do I test whether there is endogeneity?
2. I can't reliable instruments for my endogenous variable. How do I resolve
the problem of endogeneity if it exists?
Thank you.
Elizabeth Asiedu
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