Business, 10.05.2021 16:10 levelebeasley1

A natural experiment is a chance occurrence that mimics a randomized controlled trial. In order to analyze causal effects from natural experiments, economists make use of a statistical method known as instrumental variables, in which one variable from a natural experiment is used as an instrument for a particular independent variable of interest. Assume the independent variable of interest is x1 and the dependent variable in a regression is y. Which of the following represent necessary characteristics of a suitable instrument? a. The instrument has at least 200 observations
b. The instrument is correlated with
c. The instrument has a conditional mean of zero
d. The instrument does not directly influence y, except through

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A natural experiment is a chance occurrence that mimics a randomized controlled trial. In order to a...

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