Identify a simple expression for the iv estimator
Consider the single equation model yi=ziB+ri where the real valued let the B^ denoted the IV estimator of B^ using as an instrument a dummy variable di. Identify a simple expression for the IV estimator in the context.
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A representative firm with short-run total cost given by the TC = 50 + 2q + 2q2 operates in a competitive industry where the short-run market demand and supply curves are given by the QD = 1,690 - 40P and QS = -390 + 20P.
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Suppose that the nominal interest rate on 10 year bonds is the 10% at home and 6% abroad. Further assume inflation is expected to be 3% abroad and 6% at home.
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