When calculating the TSLS standard errors
A)you do not have to worry about heteroskedasticity, since it was eliminated in the first stage
B)you can use the standard errors reported by OLS estimation of the second stage regression.
C)the critical values from the standard normal table should be adjusted for the proper degrees of freedom.
D)you should use heteroskedasticity-robust standard errors.

Question

Quizplus · Accepted Answer

TSLS can still suffer from heteroskedasticity, so it is recommended to use heteroskedasticity-robust standard errors in order to account for it. Using the standard errors from OLS estimation may not be accurate in the case of TSLS. Additionally, the critical values from the standard normal table should be adjusted for the degrees of freedom when calculating TSLS standard errors.

When Calculating the TSLS Standard Errors