Exogenous and endogenous variables: Difference between revisions

Revision as of 18:14, 23 February 2021

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In the [[IS–LM model|LM model]] of interest rate determination,<ref name=Mankiw/>{{rp|pp. 261–7}} the supply of and demand for [[money]] determine the [[interest rate]] contingent on the level of the money supply, so the [[money supply]] is an exogenous variable and the interest rate is an endogenous variable.

In a model of [[firm behavior]] with competitive input markets, the prices of [[input (economics)|inputs]] are exogenously given, and the amounts of the inputs to use are endogenous.<ref name=Varian/>{{rp|p. 202}}

==Sub-models and models==