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The Cure Can Be Worse than the Disease: A Cautionary Tale Regarding Instrumental Variables

John Bound, David Jaeger () and Regina Baker

No 137, NBER Technical Working Papers from National Bureau of Economic Research, Inc

Abstract: In this paper we draw attention to two problems associated with the use of instrumental variables (IV) whose importance for empirical work has not been fully appreciated. First, using potential instruments that explain little of the variation in the: endogenous explanatory variables can lead to large inconsistencies of the IV estimates even If only a weal

JEL-codes: C25 J31 (search for similar items in EconPapers)
Date: 1993-06
Note: LS
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Published as "Problems with Instrumental Variables Estimation when the Correlation Between the Instruments and the Endogenous Explanatory Variables is Weak," Journal of the American Statistical Association, 90 (June): 443-450. 1995

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