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3SLSThree Stage Least Squares
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Table 3 reports the estimates of three-simultaneous-equation model (3SLS).
TABLE 3 Instrumental Variables Regression (3SLS) Results SUR1 School Interaction Panel A Term only Capital Variables Stock Growth TFP Growth FDI -0.2594 (0.4780) -1.6108 * (0.9541) FDI x School 0.5308 (0.3383) 2.0765 *** (0.7061) School 0.0031 (0.0022) 0.0087 ** (0.0042) FDI x FinDepth FDI x [FinDepth.sup.2] FinDepth Ln (GDP) -0.0021 (0.0018) -0.0058 * (0.0034) No.
(12) A Hausman test was used to compare 3SLS and SUR estimates of the industry wage equations.
Because of these inadequacies, in the following we focus on interpreting the 3SLS results.
To address the possibility that the significant association between per capita income and governance is due to endogeneity of per capita income, the regressions are reestimated by IV and 3SLS. In the IV estimation, per capita income is treated as endogenous, and a country's level of schooling is used as an instrument.
(2) I also use a 3SLS estimation of Tobin's q, board size, insider ratio, and leverage, and find results that are consistent with the wealth transfer hypothesis, that by reducing firm risk, larger boards reduce equity holder value.
The use of the 2SLS or 3SLS techniques does not solve this problem because of the difficulty in finding appropriate exogenous variables to identify the equations.
In such situations, a 3SLS approach helps account for correlations in the error terms across equations using generalized least squares (GLS) and instrumental variables to produce consistent estimates (Johnston 1997).
Since the systems estimator (i.e., 3SLS) is more efficient than the single equations estimator (i.e., 2SLS), a full system estimation procedure, namely 3SLS, is implemented using the set of instrumental variables for joint estimation of equations (1) and (2).
Structural Model (estimation by 3SLS) [absolute Coefficient value of t] Stage one Dependent variable: RELATIVE REVENUE Log inner zone population 0.56 4.61 Log outer zone population 0.38 4.81 Proportion 65+ -9.38 3.80 Years of membership 0.01 6.47 Overlap -0.24 6.54 Constant 2.83 6.85 Stage two Dependent variable: RELATIVE WAGE BILL Relative revenue 0.87 29.22 Constant 0.11 3.02 Stage three Dependent variable: POSITION Relative wage bill 27.00 16.56 Constant 27.90 14.72 Number of observations 449
The two equations are then estimated jointly using the method of three-stage least square (3SLS).
Therefore, to check for bias in the result s due to endogeneity, long-term unemployment was used as an instrument for the lagged value of LMP commencements in a three-stage least squares (3SLS) reestimation of the system.