Hello dear forum members,

Suppose I have the following model:

y = a + x1 + x2 + z1 + z2 + z1*z2, where y is exponential, x1-x2 are controls, and z1-z2 are endogenous interacting predictors of interest.

Assuming I want to correct for endogeneity using IV approach, what will be the appropriate model to use:

A. y = a + x1 + x2 + (z1 z2 = iv1 iv2) --> consider endogenous variables separately;

B. y = a + x1 + x2 + (z1*z2 = iv1 iv2) --> consider endogenous variables as an interaction;

C. or something else?

I'd appreciate your suggestions on this

Suppose I have the following model:

y = a + x1 + x2 + z1 + z2 + z1*z2, where y is exponential, x1-x2 are controls, and z1-z2 are endogenous interacting predictors of interest.

Assuming I want to correct for endogeneity using IV approach, what will be the appropriate model to use:

A. y = a + x1 + x2 + (z1 z2 = iv1 iv2) --> consider endogenous variables separately;

B. y = a + x1 + x2 + (z1*z2 = iv1 iv2) --> consider endogenous variables as an interaction;

C. or something else?

I'd appreciate your suggestions on this

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