What can we conclude about the endogeneity of an explanatory variable if the OLS and 2SLS estimates are significantly different? Assume that the instrument used was exogenous.
A. The explanatory variable is not endogenous and therefore using 2SLS is ill-advised.
B. The explanatory variable is not endogenous and therefore OLS should not be used.
C. The explanatory variable is endogenous and therefore using 2SLS should be considered.
D. The explanatory variable is endogenous and therefore OLS should be used.
Answer: C
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