Hi listers,
My substantive curvelinear regression equation is
Y = a + b1(x1) + b2(x1*x1) + control1 + control2
However, I'm pretty certain that x1 is endogenous and determined by the
instruments z1 and z2. My intuition then tells me that x1*x1 must be
endogenous too. Hence my "manual" solution would be to:
reg x z1 z2
predict test
gen testsq=test*test
reg y test testsq control1 control2
Two qustions:
1. Is my intuition/reasoning correct here?
2. Can this be done more automatically, so that I get correct standard
errors (I assume they ar wrong in my manual solution)?
Thanks in advance for any help.
Best regards,
Christer Thrane
qustion: How do I perform the IVreg in this setting
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