contestada

Consider the following regression model: Y₁ = Bo + B₁X₁i + B2X2i + Ui X₁i is known to be endogenous. X2i is exogenous. This file contains data on the variables in this model and 2 other variables that are potential instruments for X₁i. Test the null hypothesis that the proposed instruments are exogenous using a 5% significance level. To answer this question, you should estimate the auxiliary regression by OLS and compute the test statistic manually. You should explain clearly how you conducted the test and paste in relevant Gretl output.