Summary: In heterogeneous treatment effect models with endogeneity, identification of the local average (LATE) typically relies on availability an exogenous instrument monotonically related to participation. First, we demonstrate that a strictly weaker monotonicity condition—invoked for specific potential outcome values rather than globally—identifies LATEs compliers and defiers. Second, show o...

Using a dataset of Texas Instruments (TI) calculator auctions on eBay, we estimate the impact of the number of bidders on the winning bid. We highlight the possible endogeneity associated with using the number of observed bidders. We tackle this problem by employing approaches involving instrumental variables. We introduce a novel instrumental variable, the closing interval between successive a...

This paper considers parametric inference in a wide range of structural econometric models. It illustrates how the indirect inference principle can be used in the inference of these models. Specifically, we show that an ordinary least squares (OLS) estimation can be used as an auxiliarymodel, which leads to amethod that is similar in spirit to a two-stage least squares (2SLS) estimator. Monte C...

This study investigates the effect of cell phones on economic development and growth by performing an econometric analysis using data from the International Telecommunications Union and the Penn World Table. It discusses the various ways cell phones can make markets more efficient and how the diffusion of information and knowledge plays into development. Several approaches (OLS, Fixed Effects, ...

Prenatal care should improve infant health, yet research frequently finds only weak effects. If there are two kinds of pregnancies, 'complicated' and 'normal' ones, then combining these pregnancies may lead prenatal care to appear ineffective. Data from the National Maternal and Infant Health Survey (NMIHS) offers compelling evidence. The standard 2SLS approach yields obviously bimodal residual...

This paper examines the determinants of executive compensation in Chinese banking during 2005–2012. Using the fixed effects panel, 2SLS and dynamic GMM regressions, I find that there is no significant positive pay performance relation, and CEO power does not necessarily exhibit higher levels of executive compensation. However, I show that ownership structure (measured by ownership concentration...

This study explores the under-researched relationship between corporate governance and firm performance in tourism companies. We employ instrumental variable modelling using 2SLS for publicly listed firms in five countries in the Middle East. Board independence is found to be positively related to firm performance and stock performance, suggesting that having independent directors among board m...

Empirical researchers often combine multiple instrumental variables (IVs) for a single treatment using two-stage least squares (2SLS). When effects are heterogeneous, common justification including IVs is that the 2SLS estimand can be given causal interpretation as positively weighted average of local (LATEs). This requires well-known monotonicity condition. However, we show with more than one ...

This paper analyzes the higher-order approximation of instrumental variable (IV) estimators in a linear homoskedastic IV regression model when large set instruments with potential invalidity is present. We establish theoretical results on mean-squared error (MSE) two-stage least-squares (2SLS), limited information maximum likelihood (LIML), Fuller (FULL), bias-adjusted 2SLS, and jackknife versi...