Exogenous and endogenous variables: Difference between revisions

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{{For2|the term in biology|[[Endogeny (biology)]]|the term in econometrics|[[Endogeneity (econometrics)]]|other uses|[[Exogeny]]}}

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

{{Forshort description|endogenousClassification of variables in biology|Endogenyeconomic (biology)models}}

{{short description|Economic models}}

In an [[economics|economic]] [[model (economics)|model]], an '''exogenous variable''' is one whose value is determined outside the model and is imposed on the model, and an '''exogenous change''' is a change in an exogenous variable.<ref name=Mankiw>Mankiw, N. Gregory. ''Macroeconomics'', third edition, 1997.</ref>{{rp|p. 8}}<ref name=Varian>Varian, Hal R., ''Microeconomic Analysis'', third edition, 1992.</ref>{{rp|p. 202}}<ref name=Chiang>Chiang, Alpha C. ''Fundamental Methods of Mathematical Economics'', third edition, 1984.</ref>{{rp|p. 8}}

In contrast, an '''endogenous variable''' is a variable whose value is determined by the model. An '''endogenous change''' is a change in an endogenous variable in response to an exogenous change that is imposed upon the model.<ref name=Mankiw/>{{rp|p. 8}}<ref name=Chiang/>{{rp|p. 8}}

InThe term '''[[endogeneity (econometrics)|endogeneity]], an exogenous variable is assumed to be fixed''' in repeated [[Sampling (statistics)|samplingeconometrics]], whichhas meansa itrelated isbut adistinct [[:wikt:nonstochastic|nonstochastic]] variablemeaning. An implicationendogenous ofrandom this assumptionvariable is that[[correlation|correlated]] with the [[Errors and residuals|error term]] in the econometric model, iswhile independent of thean exogenous variable is not.<ref>{{cite book |first=Jeffrey M. |last=Wooldridge |authorlink=Jeffrey Wooldridge |title=Introductory Econometrics: A Modern Approach |___location=Mason |publisher=South-Western |edition=Fourth |year=2009 |isbn=978-0-324-66054-8 |page=49 |url=https://books.google.com/books?id=64vt5TDBNLwC&pg=PA49 }}</ref>

==Examples==