Consider a regression model \( y = \beta_0 + \beta x + u \) where the continuous variable \( y \) is regressed on a dummy variable \( x \), which takes the value either 1 or 0.
However, the model was estimated using the instrumental variable (IV) estimation method, wherein the indicator variable \( z \) is used as an instrument of \( x \).
Let \( \bar{y}_1 \) and \( \bar{y}_0 \) be the sample averages of \( y \) when \( z \) takes the value 1 and 0, respectively.
Let \( \bar{x}_1 \) and \( \bar{x}_0 \) be the sample averages of \( x \) when \( z \) takes the value 1 and 0, respectively.
Let \( \bar{y}_1 \) and \( \bar{y}_0 \) be the sample averages of \( y \) when \( x \) takes the value 1 and 0, respectively.
Let \( \bar{z}_1 \) and \( \bar{z}_0 \) be the sample averages of \( z \) when \( x \) takes the value 1 and 0, respectively.
Then the estimated coefficient of \( \beta_{IV} \) is: