If You Conduct Your Estimation Using Two-Stage Least Squares by Separately

Multiple Choice

If you conduct your estimation using two-stage least squares by separately estimating each regression (say in Excel) , what condition should you be aware of when interpreting your second stage results?

A) The coefficients will be too low.
B) The coefficients will be too high.
C) The standard errors reported in the second stage are not accurate.
D) The residuals do not sum to zero as they due in the first stage.