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A cautionary tale about control variables in IV estimation

Deuchert, Eva ; Huber, Martin

(Working Papers SES ; 453)

Many instrumental variable (IV) regressions include control variables to justify (conditional) independence of the instrument and the potential outcomes. The plausibility of conditional IV independence crucially depends on the timing when the control variables are determined. This paper systemically works through different IV models and discusses the (conditions for the) satisfaction of...