How to solve endogeneity issue when dependent and endogenous independent variable both are BINARY

[Fozan Rao]

Hi, I have a regression model where my dependent variable (Y) is binary, the endogenous independent variable (x1) is also binary and i have identified two IVs which are continuous. I have been told that i cannot use the 2sls with probit in both steps because its called the "forbidden regression". Moreover, "ivprobit" cannot work because the endogenous independent variable is binary. Can someone please guide me on how to tackle this issue? Thanks.

[Amin Sofla]

You might want to take a look at here and try special regressor method.

ssc install sspecialreg
help sspecialreg

[Fozan Rao]

Thanks for the suggestion, Amin. I think this can work.

[Phil Bromiley]

Some of the extended regression routines in Stata 15 might also work.