Instrumental Variables Models

This chapter presents various examples on instrumental variable models, either univariate or multivariate, as the extension of the LVAR(p,q) additive as well as interaction models previously presented. Based on our experimentation, we have recognized that it is very difficult to obtain the best set of instrumental variables for a specific model. In fact, we have two-stages of problems (TSOP) in doing data analysis based on an instrumental models, those are to defined a basic model based on a set of endogenous and exogenous variables that is needed instrumental variables, then to select the best set of the instrumental variables. For this reason, it is suggested to modified the basic model, instead of using the instrumental variable model.