The Estimation for IV Regression Identification with IV: To test the correlation between treatment and potential outcome: Y:=a+tDi+Aiy+vi If we have an instrumental variable Cov(Y:,Z,)=Cov(a,Z,)+rCov(D,Z)+Cov(,2:) If relevance assumption and exogeneity assumption both satisfy: Tny Cov(Y,Z) Cov(D:,Z) 16
• Identification with IV: • To test the correlation between treatment and potential outcome: • If we have an instrumental variable • If relevance assumption and exogeneity assumption both satisfy: 16 The Estimation for IV Regression
The Estimation for IV Regression Identification with IV: The Reduced-Form Equation: D:=Xπ10十r1Z,+e Y;=Xπ20+x2Z:+e2 The Structural Equation: Y:=Xia+tD;+ 17
• Identification with IV: • The Reduced-Form Equation: • The Structural Equation: 17 The Estimation for IV Regression