Hi,
I have an instrument, that I want to use with IV 2SLS, to predict my endogenous variable.
The scatter plot of my instrument against my endogenous variable looks like this. Using Stata's binscatter, I can absorb control variables and fixed effects, and the resulting binscatter plot looks like this. The First Stage of IV 2SLS has the expected positive sign, is statistically significant, and the F Stat is above the 10 critical threshold.
In a separate analysis, I have second instrument, that I want to use to predict a separate endogenous variable. The scatter plot is here and the binscatter here.
My question is: are my instruments too noisy? I see many outliers, and I am not sure about whether the fact that I get a positive and significant First Stage, and F Stats above 10, is a statistical artefact.
Thanks!
I have an instrument, that I want to use with IV 2SLS, to predict my endogenous variable.
The scatter plot of my instrument against my endogenous variable looks like this. Using Stata's binscatter, I can absorb control variables and fixed effects, and the resulting binscatter plot looks like this. The First Stage of IV 2SLS has the expected positive sign, is statistically significant, and the F Stat is above the 10 critical threshold.
In a separate analysis, I have second instrument, that I want to use to predict a separate endogenous variable. The scatter plot is here and the binscatter here.
My question is: are my instruments too noisy? I see many outliers, and I am not sure about whether the fact that I get a positive and significant First Stage, and F Stats above 10, is a statistical artefact.
Thanks!
