Valid t-ratio Inference for IV

In the single-IV model, researchers commonly rely on t-ratio-based inference, even though the literature has quantified its potentially severe large-sample distortions. Building on the approach for correcting inference of Stock and Yogo (2005), we introduce the tF critical value function, leading to a minimized standard error adjustment factor that is a smooth function of the first-stage F-statistic. Applying the correction to a sample of 61 AER papers leads to a 25 percent increase in standard errors, on average. tF confidence intervals have shorter expected length than those of Anderson and Rubin (1949), whenever both are bounded intervals.