I am trying to run a dynamic panel on firms measuring their R&D intensity.
My equation in it's simplest form is like this:
xtabond rdintensity
estat sargan
Interestingly, even in this simple form I receive a zero p-value for the sargan test. I know that R&D intensity is highly path dependent and therefore the lag instruments may not be very strong exogenous instruments but is DPD is not designed to specifically deal with this problem(lagged dependent)? What should I do to resolve the issue? is it sound to just ignore this?
My equation in it's simplest form is like this:
xtabond rdintensity
estat sargan
Interestingly, even in this simple form I receive a zero p-value for the sargan test. I know that R&D intensity is highly path dependent and therefore the lag instruments may not be very strong exogenous instruments but is DPD is not designed to specifically deal with this problem(lagged dependent)? What should I do to resolve the issue? is it sound to just ignore this?
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