Questions tagged [endogeneity]

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Intuition behind the Endogeneity Test (the Hausman Test)

Suppose we have the following simple regression model (time series framework)" $$y_1=\beta_0+\beta_1 y_2+\beta_2 z_1 +\beta_3 z_2 +u,$$ where $z_1$ and $z_2$ are exogenous and $y_2$ is either ...
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is endogeneity a problem in the first-stage regression in a two-stage least square regression?

We have this model: $$D=\alpha_1+\gamma_1 Z + \epsilon_1$$ $$Y=\alpha_2+\gamma_2 D + \epsilon_2$$ Notations are as usual: Y is the outcome, D is the treatment, Z is the instrument Two conditions for ...
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If an endogenous explanatory variable is serially correlated does it mean that its lags are also endogenous?

in panel data when examining economic growth determinants lags are often used to account for endogeneity of explanatory variables. However if the explanatory variable is serially correlated, does it ...
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60 views

Addressing endogenity in price elasticity and the Promotion Optimization Problem

I have data on purchases gross prices discounts (like coupons) net prices (i.e. gross price - discounts) number of leads (potential customers at any given time) conversion rates (# purchases / # ...
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Sources of the endogeneity of money in New Keynesian economics (Woodford)

I am trying to wrap my head around Woodford's "Interest and Prices" so I have a question regarding the source of the endogeneity of the money supply in his models. The Post Keynesian view is that ...
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The rationale for using a lagged variable to address endogeneity arising from simultaneous causation?

when there is simultaneous causation between dependent and independent variables often in papers we see a lagged variable being used in place of contemporaneous variable. For example, Clemens, ...
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382 views

How to test if variables are jointly determined?

If I wanted to test, for example, if consumption growth and credit growth are jointly determined, and therefore justifying the use of instrumental variables, how would I go about this? Would running a ...