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Answer by Johan de Aguas for Why can we formally test the relevance...
In the linear setting, if $Z$ is a valid instrument, the relevance condition mandates that $\operatorname{cov}(Z,X_1 \mid X_2) \neq 0$. This can be tested by fitting a model with $X_1$ as the dependent...
View ArticleWhy can we formally test the relevance assumption of instrument variable?
I saw in my old slides about IV, the professor said we cannot test exclusion assumption of IV but we can test relevance assumption of IV. His argument for not able to test exclusion is:$y=\beta_1 x_1...
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