The Nonexistence of Instrumental Variables

Stephen Hall, George Tavlas and P. A. V. B. Swamy ()

No 11/24, Discussion Papers in Economics from Division of Economics, School of Business, University of Leicester

Abstract: The method of instrumental variables (IV) and the generalized method of moments (GMM) has become a central technique in health economics as a method to help to disentangle the complex question of causality. However the application of these techniques require data on a sufficient number of instrumental variables which are both independent and relevant. We argue that in general such instruments cannot exist. This is a reason for the widespread finding of weak instruments.

JEL-codes: C32 C51 (search for similar items in EconPapers)
Date: 2011-03
New Economics Papers: this item is included in nep-soc
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Working Paper: The Nonexistence of Instrumental Variables (2009)
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