You are asked to study the following model:

??????_????= ??_??+ ????????_????+ ????????????_???? + ??_??????? + ??_????

Where the y variable is GDP of country i in time t, inv is investment of country i in time t, labor is the laborforce and Z is a vector of other variables. It is said that investment is an endogenous variable.

A.) What is an endogenous variable in the context of this model?

B.) If the endogenous model is not corrected, when what kind of issues can we face in estimating the model?

C.) What steps will you take to correct the issue of endogeneity?

D.) Should you study a fixed effects model or a random effects model? Why?

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Keith LeannonLv2

9 Sep 2018

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Country A is located on a small island that is isolated from the outside world. The country
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G = t
Now, suppose that the firm cannot change its capital stock, or improve its production technology in the short period, such that z and K are given.
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Please do not regurgitate the question already on the site, it is NOT helpful. Hi there, can you please provide input. This is for a MBA level class, so it needs to be very specific. I have completed a general answer but again the answer needs to be clear and specific and detailed, I feel I need additional help to what is being asked. I reviewed some answers on this site and either they are just too general or the level of english is so poor and it makes it difficult to understand what is being said. thank you. "Suppose you were working as an Asian investment analyst and were asked to provide a brief report(1-2 pages) on the Japanese economy during the coming two years. Use the Three-Sector Model to explain the effects an increase in Chinaâs real GDP should have on the Japanese economy. Remember that if Chinaâs real GDP rises, the nation will import more from Japan. Assume that Japan and China have high-mobility international capital markets and that Japan wants to keep the yen tied to the yuan so the exchange rate between the yuan and yen is fixed."

Economists use economic models to guide their thinking in regards explaining and predicting that which is otherwise unknown. These models are generalizations that rest on assumptions we use in creating a simplified setting, where only that which is most-pertinent is allowed to come into play directly, and at the same time, that which is not pertinent is rendered excluded by being held constant. Simply put, if you change your founding assumptions, you change the model for you have changed the simplified setting. If you change a variable that is included directly into the model, you can then assume the variable changes marginally then trace out the effects of this marginal change on the variable being explained. Similarly, If you allow a change of a variable that has been excluded, you are relaxing an assumption so you can reason out what the effects of such a change could be.

What is important to understand here, is the description I have just relayed to you describes how economists use models. It is but one example of how models are used more-generally in ALL the other sciences and social sciences. And to go a step further, it is but a description or formalization of how we in an all-inclusive sense use assumptions when we are reasoning about that which we reason about. Our assumptions are our foundations for our thoughts about all that we consider in our efforts towards understanding the world in which we live and the people, both individually and collectively inclusive of their institutions, with whom we come into contact.

Using this knowledge, describe what you think are the dangers to our thinking and actions based on our thinking of our using simplifying assumptions that are wholly untrue or are too strong, too constricting, are way too over-generalizing. Choose whatever context you wish and provide an example. Then describe why having at the very least a small measure of skepticism may be considered healthy for one's own sake and the sake of others.