1. IV and Modelling Expectations

2. Load the data in the usual way

4. Making a Lag is easy now we want to make a lead (a future variable) this is just making a lag with a negative lag length (-1 for one period ahead)

7. Change the name to remember its an expectation

8. The lag variable looses an observation at the begining

9. The lead variable looses one at the end

10. First do the two stage least squares model in two stages, begin by constructing the instrument.

23. Now do the same model in one go by IV

28. Same coefficients
Different standard errors and t stats