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Supposedly Strong Instruments and Good Leverage Points

Darwin Ugarte Ontiveros () and Vincenzo Verardi

No 1203, Working Papers from University of Namur, Department of Economics

Abstract: In this paper, we warn on the overoptimistic conclusions led by weak instruments testing when good leverage points are present in the first stage of an IV estimation. Some simulations and an empirical application are provided to illustrate the point raised.

Keywords: Instrumental variables; Weak instruments; Outliers; Robust statistics (search for similar items in EconPapers)
JEL-codes: C3 C12 O1 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2012-02
New Economics Papers: this item is included in nep-ecm
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Downloads: (external link) First version, 2012 (application/pdf)

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