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Yi = B₁ + B₂x2i + B3X3i + ei What properties must a variable z; have to be considered a valid instrument for x3; in the above equation?

Yi = B₁ + B₂x2i + B3X3i + ei What properties must a variable z; have to be considered a valid instrument for x3; in the above equation?

Algebra & Trigonometry with Analytic Geometry
Algebra & Trigonometry with Analytic Geometry
13th Edition
ISBN:9781133382119
Author:Swokowski
Publisher:Swokowski
Chapter4: Polynomial And Rational Functions
Section4.3: Zeros Of Polynomials
Problem 67E
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Vi = B1 + B₂x2i + B3X3i + ei What properties must a variable z; have to be considered a valid instrument for x3; in the above equation? Select one: ○a. E(e₁|zi) = 0 and cov(Z₁, X3i) = 0 O b. E(zile;) = 0 and cov(Z₁, X3i) = 0 O c. E(eizi) = 0 and cov(Z₁, X3i) ‡ 0 O d. E(zilei) = 0 and cov(Z₁, X3i) ‡ 0
Transcribed Image Text:Vi = B1 + B₂x2i + B3X3i + ei What properties must a variable z; have to be considered a valid instrument for x3; in the above equation? Select one: ○a. E(e₁|zi) = 0 and cov(Z₁, X3i) = 0 O b. E(zile;) = 0 and cov(Z₁, X3i) = 0 O c. E(eizi) = 0 and cov(Z₁, X3i) ‡ 0 O d. E(zilei) = 0 and cov(Z₁, X3i) ‡ 0
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