Hello:
I would like to ask that when dealing with only one endogenous variable, say X1, is it correct to instrument X1 by multiple IVs, say Z1, Z2, and Z3? That is, putting Z1 Z2 and Z3 all together in the first stage regression? Or it is better to use the IVs separately in the regression?
From my understanding, it is ok, but the standard errors may be somewhat unusual. The paper suggests a way how the standard errors can be corrected: https://economics.mit.edu/files/1106
Could anyone tell me the STATA code for correcting the standard errors when using multiple IVs? Thank you!
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