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In SPSS, to perform this analysis, the following steps are involved: 1  Click on the âSPSSâ icon from the start menu. 2  Click on the âOpen dataâ icon and select the data. 3  Click on the âanalysisâ menu and select the âregressionâ option. 4  Select two-stage least squares (2SLS) regression analysis from the regression option. Click on the âOpen dataâ icon and select the data. 2  Click on the âanalysisâ menu and select the âregressionâ option. 3  Select two-stage least squares (2SLS) regression analysis from the regression option.
Most statistical software packages do this adjustment as part of the 2SLS package, but if the steps are run one at a time, the standard errors in the second stage must be corrected manually. Equation Further Reading Wooldridge, J.M. 2003. Introductory Econometrics, Mason, OH: Thomas South-Western.Kennedy, P. 1998.n the first step, the suspected endogenous variable is regressed on all the exogenous (predetermined) variables in the model. The values of the suspected explanatory variable predicted from the first step then are used as instruments for the suspected endogenous explanatory variable in the equation of interest.