Given this goal, we were primarily interested in comparing the magnitude of the path coefficients representing the direct and indirect causal effects between the exogenous and endogenous variables
and determining which of the competing models was the most plausible in terms of its fit to the data.
Exhibit 6 presents the effects of the endogenous variables
on the endogenous variables
(beta paths) for the final model.
We label the resulting predicted variables PredHedging ratio and PredAAC smoothing ratio and use them as endogenous variables
in the second stage of the estimation along with the exogenous variables.
In simultaneous equations models, a system of interdependent equations is developed with one equation for each of the endogenous variables
in the model.
The second equation is the food label use model, which includes nutrition information as an endogenous variable
We ran the 2SLS with the nonrespondents to the endogenous variables
set equal to 0 and found that the coefficients were statistically not distinguishable from those reported.
The percentage of students in private schools in a school district is treated as an endogenous variable
in the achievement equation.
where yt is an endogenous variable
, [beta] coefficients suggest the effects of the changes of exogenous variables of xt and zt and the lagged changes of the endogenous variables
( since i = 1, 2.
The idea we try to convey is that in using the money supply or other endogenous variables
to provide information about its non-price ultimate objectives, the authority will be forced to adhere to a policy of less strict control over the price level than would be possible with a price level rule.
But, the modern theory of regulation (Stigler-Peltzman) suggests that regulation is an endogenous variable
, influenced by the political power of the group that is often being regulated.
Zellner and Palm (1974), however, have pointed out that if a conventional model's exogenous variables are generated by an ARIMA process, the model's endogenous variables
are generated the same way.
Empiricists: Convinced that observation is our only tool against economic ignorance, empiricists are certain that the only defensible theoretical propositions are those derived from discerning patterns whereby changes in exogenous variables constantly precede changes in endogenous variables
, thus establishing empirically (for example, through Granger tests) the direction of causality.