Applied Impact Evaluation
Exogeneity refers to the condition in which an explanatory variable is not correlated with the error term in a regression model, implying that the variable is determined outside the model. This concept is crucial for ensuring unbiased and consistent estimates in causal inference, as it indicates that any variations in the explanatory variable do not arise from omitted variables or simultaneous causality. Understanding exogeneity helps to distinguish between different estimation strategies used to address issues like endogeneity in various econometric methods.
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