Exogenous and endogenous variables: Difference between revisions

Revision as of 04:03, 6 March 2019

Revision as of 04:03, 6 March 2019

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{{AFC submission|t||ts=20190306040314|u=Loraof|ns=118|demo=}}

<!-- Note: The following pages were redirects to [[Exogenous_and_endogenous_variables]] before draftification:

*[[Exogenous variables]]

*[[Endogenous (economics)]]

*[[Exogenous variable]]

*[[Endogenous variable]]

*[[Endogenous and exogenous variables]]

*[[Endogenous variables]]

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{{For|other uses of exogeny|Exogeny}}

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An economic variable can be exogenous in some models and endogenous in others. In particular this can happen when one model also serves as a component of a broader model. For example, the [[IS-LM|IS]] model of only the goods market derives the market-clearing (and thus endogenous) level of [[output (economics)|output]] depending on the exogenously imposed level of [[interest rate]]s, since interest rates affect the [[physical investment]] component of the demand for goods. In contrast, the [[IS-LM|LM]] model of only the money market takes income (which [[identity (mathematics)|identically]] equals output) as exogenously given and affecting [[money demand]]; here equilibrium of money supply and money demand endogenously determines the interest rate. Moreover, the IS model and the LM model can be combined to give the [[IS-LM model]], in which both the interest rate and output are endogenously determined.

[[:Category:Technical terminology]]

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