3. Econometrics

Instrumental Variables — Quiz

Test your understanding of instrumental variables with 5 practice questions.

Practice Questions

Question 1

What does the exclusion restriction imply about the instrument Z in an IV setting?

Question 2

Which equation represents the reduced form in IV estimation?

Question 3

In an IV regression with more instruments than endogenous regressors, the model is said to be:

Question 4

Which statistical test is used to assess the validity of overidentifying restrictions in an IV model?

Question 5

Under which condition is OLS estimation preferred over IV estimation?