Economics · Econometrics
In the context of Ordinary Least Squares (OLS) regression, what defines endogeneity?
- 1The error term is correlated with an independent variable✓
- 2Independent variables are highly correlated with each other
- 3The error term is uncorrelated with all independent variables
- 4The error term is normally distributed
Correct answer
The error term is correlated with an independent variable
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