Instrumental Variables Calculator Excel Template
Instrumental Variables Calculator Excel Template
Interactive Excel Financial Model
Download, customize, and integrate into your own analysis
What's Included
- Interactive financial model with live Excel formulas
- All formulas visible and fully editable
- Professional formatting with color-coded inputs & outputs
- Formula reference sheet with variable definitions
- Step-by-step instructions sheet
- Compatible with Microsoft Excel 2016 and later
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Price range: $0.00 through $20.00
Excel template comparing OLS vs IV/2SLS estimates with weak instrument, endogeneity, and overidentification diagnostic tests.
Online Calculator vs Excel Template
| Feature | Online | Excel |
|---|---|---|
| Instant use โ no download | ✓ | โ |
| Works offline | โ | ✓ |
| Customize formulas & layout | โ | ✓ |
| Save & share with colleagues | โ | ✓ |
| Integrate into your own models | โ | ✓ |
| Print-ready formatting | โ | ✓ |
About This Template
Compare OLS and IV/2SLS estimates with this professional Instrumental Variables Calculator Excel template. If you're dealing with endogeneity in your regression analysis, this downloadable spreadsheet helps you evaluate whether to use ordinary least squares or two-stage least squares estimation based on rigorous diagnostic tests.
What You Can Calculate
This Excel template computes confidence intervals for both OLS and IV/2SLS coefficient estimates, then runs three key diagnostic tests to guide your estimation choice:
- Weak Instrument Test โ Evaluates first-stage F-statistic against the Stock & Yogo F > 10 benchmark
- Durbin-Wu-Hausman Test โ Detects endogeneity by testing the significance of first-stage residuals
- Sargan Overidentification Test โ Tests instrument validity when you have more instruments than endogenous variables
The template combines these diagnostics into a clear recommendation: Use OLS, Use IV/2SLS, or flag concerns about instrument strength or validity.
Required Inputs
Enter your regression output from statistical software:
- OLS and IV/2SLS coefficient estimates with standard errors
- First-stage partial F-statistic on excluded instruments
- Sample size, number of regressors, and number of excluded instruments
- DWH endogeneity t-statistic from the augmented regression
- Sargan J-statistic (optional, for overidentified models)
Methodology
Confidence intervals use the standard formula: b ยฑ tฮฑ/2,df ร SE. The weak instrument test applies the Stock & Yogo (2005) heuristic that partial F > 10 indicates adequate instrument strength. The DWH test follows Wooldridge's augmented regression approach, comparing |t| on first-stage residuals to the critical value. For overidentified models (q > 1), the Sargan J-statistic tests whether all instruments satisfy the exclusion restriction.
Assumptions & Limitations
- Standard errors assume homoskedasticity; heteroskedasticity-robust inference requires separate computation
- The F > 10 rule is a heuristic, not a formal test
- IV estimates represent the Local Average Treatment Effect (LATE) for compliers under heterogeneous effects
- Designed for cross-sectional IV/2SLS; panel data and GMM applications require additional diagnostics
Frequently Asked Questions
You need your OLS and IV/2SLS coefficient estimates with their standard errors, the first-stage F-statistic on excluded instruments, sample size, number of regressors, number of excluded instruments, and the DWH endogeneity t-statistic. For overidentified models (q>1), you can optionally enter the Sargan J-statistic.
The template combines three diagnostic tests: (1) weak instrument test (F >= 10 benchmark), (2) DWH endogeneity test, and (3) Sargan overidentification test (if applicable). It recommends OLS if instruments are strong and no endogeneity is detected, IV/2SLS if endogeneity is detected, or flags concerns if instruments are weak or validity is questioned.
This template is designed for cross-sectional IV/2SLS diagnostics using conventional standard errors. For panel data IV (fixed effects, GMM) or time series applications with serial correlation, you would need robust standard errors and additional diagnostics not included here.
A fully interactive financial model with live Excel formulas, an Instructions sheet with usage guide, and a Formula Reference sheet with variable definitions and model assumptions. All formulas are visible and editable.
Microsoft Excel 2016 or later. The template uses standard Excel formulas only โ no macros, VBA, or add-ins required.
Yes. All cells are fully editable. You can modify any formula, add your own calculations, change formatting, or integrate the model into your existing spreadsheets.
The online calculator runs in your browser for quick calculations. This Excel template gives you a portable, offline financial model you can customize, save, share with colleagues, and integrate into your own analysis.
This template is provided for educational and personal use. You may use it in your own professional analysis and presentations. Redistribution or resale of the template itself is not permitted.
You can re-download the latest version from your account or by requesting a new download link. Free downloads are limited to 5 per email address per month.
