Hello,

I have read a few posts on here that discuss IV when the model has interaction terms, but I have not seen advice on the model where the IV is an interaction term. For instance:

ivregress 2sls dep_var control_vars (endogenous_var=c.Z1##c.X)

Where Z1 is a continuous variable that I consider to be an instrumental variable, however it is aggregated at a state level so I want to interact it with an individual level variable X to get more variation.

This command will run, however I am unsure if my coefficients are biased from a mispecification of my model?

Thank you,
Donovan