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Oh, you're obviously fine on the instrument count then. The standard interpretation would be that running 2sls corrects for bias in OLS, and the 2sls results would be preferred. LEV and LIQ are negatively related in both OLS and also in the first 2SLS, however, for the second 2SLS model, it show a ...

Hi, thank for reply. here is my full models: (1) LEV = a1 + b1*GR + b2*SIZ + b3*PROF + b4*TANG + b5*LIQ + b6*NDTS (2) LIQ = a2 + c1*GR + c2*SIZ + c3*CFR + c4*LEV I do OLS with b5 and c4 are negative With 2SLS, The instruments are For (1): C GR SIZ PROF TANG NDTS CFR For (2): C CFR GR SIZ PROF TANG N...

Hi all, I am using two stage least square to test the endogenous relationship between 2 variables Y and M Y = a1 + b1*X + b2*Z + b3*M M = a2 + b4*Y + b5*Z Did OLS regression, I got b3 is negative and b4 is negative. However, when I run 2SLS, I got b3 is positive and b4 is still negative. Anyone know...