Again with three periods of data, but now consider the panel data model \(y_{i t}=\alpha_{i}+\beta x_{i t}+\gamma w_{i t}+u_{i t}\), where \(\alpha_{i}\) is a fixed effect, and consider IV estimation based on the first differences model, \(y_{i t}-y_{i, t-1}=\beta\left(x_{i t}-x_{i, t-1}\right)+\) \(\gamma\left(w_{i t}-w_{i, t-1}\right)+\left(u_{i t}-u_{i, t-1}\right)\).