Correct identification in EZW

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How to Correct identification in EZW

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this video covers identification in two-stage least-squares models at the end of this video you should be able to determine whether an instrumental variables model is under-identified over-identified or exactly identified and identify the effects of under identification over identification and exact identification on the ability to estimate a model so as a brief review to two stage least squares introduced in another video suppose that we would like to find the causal effect of x on y but we have a concern that our independent variable x is endogenous that will make the ols estimate of beta 1 biased and so we would like to find an instrument z for x we estimate a first stage where we regress the endogenous independent variable on the instrument z and then we estimate a second stage where we replace the endogenous independent variable x with its predicted value x hat from the first stage and we showed in the previous video that this would correct the bias as long as z is a valid instru

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