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Two-Stage Least Squares (2SLS)

Two-Stage Least Squares (2SLS) is the standard estimator implementing the Instrumental Variables identification strategy. In the first stage, the endogenous regressor is regressed on the instrument(s) and any exogenous controls to obtain fitted values. In the second stage, the outcome is regressed on these fitted values (together with the exogenous controls). 2SLS yields a consistent estimator of the causal coefficient under the IV assumptions, and inference is typically conducted with heteroskedasticity-robust standard errors (e.g., HC3).

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Updated 2026-05-16

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Data Science

Research Paper: Advanced Prompting

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