Dear all
Should the relationship between the proposed instrumental variable and
the endogenous regressor for which it instruments be likely *causal*
OR just a mere *correlation* for the IV to be a valid one?
Second, if the relationship between the proposed instrument and the
endogenous regressor has to be causal (or likely causal).
would the IV only be valid if this relationship = "IV (likely) causes
the endogenous regressor" or would the IV still be valid if the
relationship is = "endogenous regressor likely causes IV"?
How to ascertain this in Stata?
thanks
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