It’s important to note, however, that even System GMM have shown to be subject to weak instruments problems (Bazzi and Clemens, 2013). These tests include the Arellano-Bond test of autocorrelation in the residuals (which would invalidate the use of lagged levels of potentially endogenous variables as instrument for their first differences. As reported in Table 1, however, serial correlation does not appear to be an important concern in this application. The analysis also reports tests for the joint validity of all instruments (the Hansen tests of overidentifying restrictions), which do not suggest that any instruments might be invalid (see Roodman, 2009).