What is EXOGENOUS VARIABLE?

An external, independent variable having affect on a model, but not affected by the model. The model builder specified the variable but set no qualitative characteristics or value generation method. An exogenous variable is an acknowledgement that the variable exists only for setting arbitrary external conditions, and not in achieving a more realistic model behavior. As an example, government expenditure level has impact on the theory of income determination, yet is not impacted by that determination. Refer to endogenous variable.

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