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Re: st: 3SLS with different instruments for different equations


From   Kit Baum <[email protected]>
To   [email protected]
Subject   Re: st: 3SLS with different instruments for different equations
Date   Thu, 17 Mar 2011 11:58:13 -0400

<>
On Mar 17, 2011, at 2:33 AM, May wrote:

> Hi, thanks - I tried gmm specification for my model below by typing:
> 
> . gmm (Y1 - {b1}*Y2 - {b2}*Y3 - {b4}*X1 - {b5}*X2 - {b6}*X3 - {b0}) (Y2 - {b7}*Y1 - {b8}*X1 - {b9}*X2 - {b10}*X3 - {b11}*Z1 - {b12}) (Y3 - {b13}*Y1 - {b14}*X1 - {b15}*X2 - {b16}*X3 - {b17}*Z2 - {b18}), xtinstruments(X1 X2 X3, lag(0/1)) xtinstruments(2: Z1, lag(0/1)) xtinstruments(3: Z3, lag(0/1)) wmatrix(hac bartlett 1)
> 
> But I got an error message:
> 
> "Must specify winitial(xt xtspec) or winitial(matname) with XT-style instruments"
> 
> I tried searching "help winitial" but nothing came up. 
> 
> Can you please help with my gmm syntax?


In a prior posting I pointed out that what you were trying to do made no sense in a 3SLS context due to identification status of the equations. Linear GMM is no magic bullet. As ivregress and ivreg2 illustrate, GMM on a linear model is just a variation on standard least squares techniques. Likewise, linear GMM will not allow you to do something that 3SLS cannot. If a linear equation is not identified, it is not estimable, regardless of the technique used.

Kit Baum
[email protected]



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