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Income is a key regressor in many economic §applications, but it is almost always not exogenous. §Given that rainfall is externally provided by nature §and that it is also correlated with income in the §rural setting, rainfall shocks seem to be the §perfect instrument in two-stage least squares §estimation. This book examines the validity and §refinement of the use of rainfall variables as §instruments for transitory income in the context of §weak instruments.
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