Which of the following statements about Two-Stage Least Squares (2SLS) is correct?

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Economics · Econometrics

Verified Solution4 OptionsUpdated: October 2026👁️1 View

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2SLS is biased in small samples but consistent under valid instruments.

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2SLS eliminates multicollinearity.

Answer 2

2SLS does not require instruments to be exogenous.

Answer 3

2SLS is always more efficient than OLS.

Answer 4

2SLS is biased in small samples but consistent under valid instruments.

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