4. (from SW) Consider the IV regression model Y; =Bo + B1Xi + B2W; + u; where Z; is an instrument. Suppose that data on W; are not available and

the model is estimated omitting W; from the regression. a) Suppose that Z; and W; are uncorrelated. Is the IV estimator consistent?Hint: recall the IV estimator is 34SLS$Y,ZSX,Z(sample covariance of Y and Z divided by sample covariance of X and Z). b) Suppose that Zi and W; are correlated. Is the IV estimator consistent?