Hello all,

I cannot figure out how I can make the 2SLS function in Eviews 6 working...

I have already gone through the manual, but I get lost when it is talking about instruments...

For instance a small example what I want to do:

Y1 = c + X1 + X2 + residuals

X2 = c + Y1 + X3 + residuals

In other words, the original regression Y1 contains variable X2. But variable X2 is also explainable by Y1 and X3.

This is what I understand I have to do.

1) Open eviews. Click Quick/Estimate equation

2) As method I choose TSLS.

3) Now it gets confusing to me.

I believe I have to put my original regression under 'equation specification'.

So here I put: Y1 c X1 X2

4) I have no idea what I have to write into 'instrument list'

X2 Y1 X3 is not working.

I read that 2sls is done very often. So I am hoping that someone is willing to help me with this problem!

Many thanks in advance,

Jaap Smiths