Sequence of steps followed in the estimation of Two-Stage Least Squares (2SLS) starting from the beginning:
A. Application of OLS to estimate the structural coefficients
B. Identification of the endogenous and exogenous variables
C. Estimation of the reduced form equation for endogenous variables
D. Use the estimated coefficients for policy analysis
E. Use of instruments for the estimation of endogenous variables
1
B → E → C → A → D
2
A → B → E → C → D
3
B → C → A → E → D
4
E → C → B → A → D
5
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