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Estimating a Structural Equation in a Large System
Walter D. Fisher
Walter J. Wadycki
Abstract
In two stage least squares estimation, when the matrix Z of predetermined variables has less than full column rank, Z'Z is singular. It is shown that in this situation 2SLS still can be used and that Y - the result of the first stage--is still uniquely determined; also shown is that 2SLS will often be equivalent to OLS.
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