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Overidentification Tests with Grouped Data

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  • Caroline Hoxby
  • M. Daniele Paserman

Abstract

This paper examines the validity of overidentification tests and exogeneity tests in the presence of grouped data. We find that even a small intra-group correlation, when instruments do not vary within groups, may generate a substantial bias in the standard overidentification tests described in textbooks.

Suggested Citation

  • Caroline Hoxby & M. Daniele Paserman, 1998. "Overidentification Tests with Grouped Data," NBER Technical Working Papers 0223, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberte:0223
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