If an explanatory variable is strictly exogenous it implies that:

A. changes in the lag of the variable does not affect future values of the dependent variable.
B. the variable is correlated with the error term in all future time periods.
C. the variable cannot react to what has happened to the dependent variable in the past.
D. the conditional mean of the error term given the variable is zero.

Answer: C

Economics

You might also like to view...

Off-budget expenditures:

What will be an ideal response?

Economics

Specialization means that a country devotes its energy and resources to only a small proportion of the world’s productive activities.

Answer the following statement true (T) or false (F)

Economics