Testing Endogeneity in a Regression Model: An Application of Instrumental Variable Estimation
نویسندگان
چکیده
A goal of economic research is to determine the causal relationship among economic variables. This paper introduces the Hausman speci cation test of endogeneity, for testing the independence between the stochastic regressor and the disturbances. We describe alternative approaches to estimating simultaneous-equation systems and we present an empirical example of economic growth and health that nds health expenditure endogenous. We use di erent sets of instruments as exogenous determinants of health in an instrumental variables estimation.
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