3 ms·
What's meant by "tenancy lengths are endogenous"? For me, "endogenous" refers to biological processes. I'm missing the connection to tenancy duration.
by fuzzybear3965 6y ago
What's meant by "tenancy lengths are endogenous"? For me, "endogenous" refers to biological processes. I'm missing the connection to tenancy duration.
- ulucs 6y agoWe're modeling rent drops using tenancy length as an input. However, tenancy length is also affected by rents compared to market. Since the output also affects the input, we have endogeneity in an econometrics sense and blindly estimating the equation will give us wrong numbers.
- fuzzybear3965 6y agoAhhhh, it's a closed-loop feedback system, a function that depends on itself. Endogenous. Got it. Thanks!
- thazework 6y agoThey meant the statistical, not biological term. In this case, the possibility that reducing rents may effect tenancy lengths. https://www.investopedia.com/terms/e/endogenous-variable.asp https://www.investopedia.com/terms/e/endogenous-variable.asp
- fuzzybear3965 6y agoYep, you were right. Thanks for the link!