3. A researcher is interested in estimating the effect of civil war on economic

Question

3. A researcher is interested in estimating the effect of civil war on economic growth. She plans to use a sample of 100 countries to estimate the following structural model growth-80 + |civil + 2landlocked + u where grouth is the country's 2012 real GDP growth, civil is a dummy variable equal to 1 if the country has experienced a civil war in the past ten years, and landlocked is a dummy variable equal to 1 if the country is landlocked. Is civil endogenous in this equation? Explain. (Hint: are countries that experience poor economic performance more likely or less likely to be engaged in civil war?)

Explanation / Answer

Yes civil war is an endogenous variable in this equation.

The concept of endogeneity is particularly relevant in the context of time series analysis of causal processes.  It is common for some factors within a causal system to be dependent for their value in period n on the values of other factors in the causal system in period n-1.  Suppose that the civil war is independent of all other factors within a given period. In this instance it would be correct to say that civil war is endogenous over time. Countries with poor economic performance are more likely to indulge into civil wars.

Related Questions

Navigate

• Browse (All)
• Browse 3
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.