Overidentification Tests with Grouped Data
NBER Technical Working Paper No. 223
This paper examines the validity of overidentification tests and exogeneity tests in the presence of grouped data. We find that even a small intra-group correlation, when instruments do not vary within groups, may generate a substantial bias in the standard overidentification tests described in textbooks.
Document Object Identifier (DOI): 10.3386/t0223
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