Instrumental variables - Inference of IV
5 important questions on Instrumental variables - Inference of IV
What is the null hypothesis and how do we test it?
Under the MLR1-MLR6, what can be said in regards to the t distribution for the standardised estimators?
How do we test the one-sided alternative hypothesis H1: Bj > 0 and what do these values mean?
The critical value c is chosen such that the probability of rejecting H0 when it is true equals some given significance level. (5 % level test, 95th percentile of the appropriate t distribution)
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When do you reject two-sided alternatives and what's different for the critical value?
What formula is used for testing other hypothesis about Bj?
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