What is an 'Endogenous Variable'
A classification of a variable generated by a statistical model that is explained by the relationships between functions within the model. For example, the equilibrium price of a good in a supply and demand model is endogenous because it is set by a producer in response to consumer demand.
It is the opposite of an exogenous variable.
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BREAKING DOWN 'Endogenous Variable'
Endogenous variables are important in econometrics and economic modeling because they show whether a variable causes a particular effect. Economists employ causal modeling to explain outcomes (dependent variables) based on a variety of factors (independent variables), and to determine to which extent a result can be attributed to an endogenous or exogenous cause.
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