Hello.
I need to estimate the effect of a program on the likelihood to grow a certain kind of crop. As participation in the program is endogenous, I would like to use instrumental variables
ivprobit crop (program=z) x
where x are other household characteristics, and z are instruments.
As I have two points in time, I would like to consider some kind of household effect. I realize I can't use fixed effect, so I could use
xtprobit, pa
However, if I understand correctly, this does not allow instrumenting.
Question 1: Does anybody know a way out of this problem?
Question 2:
What if estimated
ivprobit crop2 (delta_program=z) crop1 x1
where variables with suffix 2 refer to the second period, and those with 1 to the first period (initial characteristics) and delta_program=program2-program1
I suspect the estimation would be biased, because of the inclusion of the lagged dependent variable... Can anybody confirm?
Thank you very much in advance
Marco
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