Suppose that equations (7.27)–(7.29) are required. 2SLS would involve the following two steps:

Stage 1 Estimate the reduced form equations (7.43)–(7.45)
individually by OLS and obtain the fitted values, and denote them where the superfluous superscript 1 indicates that these are the fitted values from the first stage.
Stage 2 Replace the RHS endogenous variables with their stage 1 estimated values (7.50)
(7.51)
(7.52)
where and are the fitted values from the reduced form estimation. Now and will not be correlated with u1 , will not be correlated with u2 , and will not be correlated with u3 .
The simultaneity problem has therefore been removed. It is worth noting that the 2SLS estimator is consistent, but not unbiased.