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Title:Identification with imperfect instruments PDF Logo
Authors:Nevo, Aviv
Rosen, Adam M.
Issue Date:2008
Series/Report no.:CSIO working paper 0097
Abstract:Dealing with endogenous regressors is a central challenge of applied research. The standard solution is to use instrumental variables that are assumed to be uncorrelated with unobservables. We instead assume (i) the correlation between the instrument and the error term has the same sign as the correlation between the endogenous regressor and the error term, and (ii) that the instrument is less correlated with the error term than is the endogenous regressor. Using these assumptions, we derive analytic bounds for the parameters. We demonstrate the method in two applications.
Document Type:Working Paper
Appears in Collections:CSIO Electronic Working Papers, Northwestern University

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