Estimating the Causal Effect of Measured Endogenous Variables: Study 1 (Simulation Data)

This is a simulated data set (n = 10.000). It contains four variables q, t, e und u, which are all normally distributed with a mean of 0 and a standard deviation of 1. Further, there are two variables x and y, which depend on the other variables as follows:

x = 0.5*q + 0.3*z + u
y = 0.4*x + 0.6*q + e

For our analysis, y represents the dependent variable, x an endogenous explanatory variable, q an omitted variable, and t an exogenous instrumental variable. u and e are the equations’ error terms.