use mroz;
read all into y var{lwage};
read all into x var{one educ exper exper2};
read all into x1 var{educ};

/* instrument matrix includes all external and internal exogenous variables */
read all into z var {one exper exper2 mothereduc fathereduc}; * iv;
read all into z1 var {mothereduc fathereduc}; * external iv;
read all into z2 var {one exper exper2}; * included iv;
rname = {one educ exper exper2};

/* Testing Overidentifying Restrictions Module */
*===============================================;
start overid;
num_overid = l-k; * number of surplus IV;
sargan = n*(ehat`*z*inv(z`*z)*z`*ehat)/(ehat`*ehat);
chi2_crit = cinv(.95,(l-k));
sargan_p = 1-probchi(sargan,(l-k));

print / 'Sargan chi-square test of surplus instrument validity'
      ,,sargan num_overid chi2_crit sargan_p;
den_df = n-l; * N - total number of IV;

/* Basmann test statistic eq */
basmann = ((n-l)/(l-k))*(ehat`*z*inv(z`*z)*z`*ehat)/
         (ehat`*ehat - ehat`*z*inv(z`*z)*z`*ehat);
f_crit = finv(.95,l-k,n-l);
basmann_p = 1-probf(basmann,(l-k),(n-l));
print ,, 'Basmann F-test of surplus instrument validity'
      , basmann num_overid den_df f_crit basmann_p;
finish;
run overid;