Good morning,
to exploit a (quasi-) experimental setting, I would like to run an IV
regression in a setting in which there is clustering with only 2
clusters, and furthermore the two clusters correspond to the two values
of the instrument dummy.
It doesn't seem to make much sense here to use cluster-adjusted standard
errors. But since the t-stats without cluster-adjustment are very large
indeed, I was wondering whether I could make an argument that they would
remain significant even if I could and did adjust for the clustering. To
do so, I would need to have an idea by what factor the standard errors
would have to be multiplied if I did adjust them. So I was wondering if
there exists any formula or rule-of-thumb that would give me an idea of
that?
Or is there another, better way to deal with this?
Many thanks!
Chris
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