Lecture12联立方程内生性问题Crosssectionandpanel.pptVIP

Research Method;Introducdtion;In econometrics, “endogeneity” usually means that an explanatory variable is correlated with the error term. In simultaneous equation models, endogeneity means that the observed variable is determined by the equilibrium. For example, an observed quantity is determined by the equilibrium between demand and supply. When a variable is endogenous in ‘simultaneous equation’ sense, it is usually endogenous in econometric sense (i.e., correlated with the error term). We will see this soon.;The nature of simultaneous equation.;z1 would be the wage rate of the manufacturi