Essay
Write a short essay about the Overidentifying Restrictions Test. What is meant exactly by "overidentification?" State the null hypothesis. Describe how to calculate the J-statistic and what its distribution is. Use an example of two instruments and one endogenous variable to explain under what situation the test will be likely to reject the null hypothesis. What does this example tell you about the exactly identified case? If your variables pass the test, is this sufficient for these variables to be good instruments?
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