Hello,
I am running an IV Regression and I just found out that my instrument is correlated with my dependent variable.
So I am unsure now if this violates the validity of my instrument. If I get IV Regression right, then I want my instrument to be correlated with the endogenous variable but not with the dependent variable.
Math4 dependent variable
lfound instrument
. corr math4 lfound, cov
(obs=2,159)
| math4 lfound
-------------+------------------
math4 | 233.484
lfound | .663162 .02298
Can someone give me a hint please?
I am running an IV Regression and I just found out that my instrument is correlated with my dependent variable.
So I am unsure now if this violates the validity of my instrument. If I get IV Regression right, then I want my instrument to be correlated with the endogenous variable but not with the dependent variable.
Math4 dependent variable
lfound instrument
. corr math4 lfound, cov
(obs=2,159)
| math4 lfound
-------------+------------------
math4 | 233.484
lfound | .663162 .02298
Can someone give me a hint please?
