Endogenous variable

Dason

Ambassador to the humans
#2
What part is giving you trouble? Do you know what it means for two variables to be correlated? Do you know what "the error term" is?
 
#3
I know what is correlation of two variables and error term (=observed-predicted value).

It confuses me the part how a variable is/can be correlated with error term and what does it mean? Does it mean that a variable contributes more to the error value?
 

hlsmith

Less is more. Stay pure. Stay poor.
#4
It can be an issue in Time Series Analysis, say with autoregressive correlation. Search out some picture of what it can look like, that may help.