Dear All,

I am estimating a spatial IV model using the files that you can download from here. They include the data file and the shp.dta file.

I generate a simple distance matrix:

Code:
spset, modify coordsys(latlong, kilometers)
spmatrix create idistance dW, replace
Then, I would like to estimate the following model:

Code:
spivregress yp9500 (pc_culture=pc_institutions literacy1880) urb_rate1850 school countryname*, het dvarlag(dW)
Unfortunately, I get the following error message:

Code:
equation not identified; must have at least as many instruments not in the regression as there are
instrumented variables
I cannot understand why, since the two instruments are not included in the set of regressors of the main equation. Even worse, the estimation of the following model is fine:

Code:


spivregress yp9500 (pc_culture=pc_institutions) urb_rate1850 school countryname*, het dvarlag(dW)








But, if I try to estimate:






Code:




spivregress yp9500 (pc_culture=literacy1880) urb_rate1850 school countryname*, het dvarlag(dW)








I get the same error message as before. So, apparently, the problem is with that variable. But it does not appear elsewhere in the estimation. Moreover, I checked if by chance it was a duplication of any other variable used in the analysis, but this is not the case. So, do you have any explanation about this issue? It is really puzzling.



Thanks in advance