An independent variable is endogenous if changes in it are related to factors in the error term.

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Endogeneity refers to the situation where an independent variable is correlated with the error term, which can bias the estimated coefficients and standard errors of the model. This can happen if there are unobserved variables that affect both the independent variable and the dependent variable, or if there are omitted variables that affect the independent variable. Endogeneity can lead to inconsistent and inefficient estimates, and requires special techniques such as instrumental variables or fixed effects to address.

An Independent Variable Is Endogenous If Changes in It Are