Question

What is an endogenous variable?

Answer 1

Endogenous Variable:

• A variable that is modified or defined by its relationship within the model to other variables.
• An endogenous variable is associated with a dependent variable
• The value of an endogenous variable is determined by the formula.
• Endogeneous variables are also called jointly determined.

For example, in a model studying supply and demand, the price of a good is an endogenous factor because the price can be changed by the producer (supplier) in response to consumer demand.

Hence, endogenous variable is explained.