Question

Discuss how to address endogeneity and how to correct for measurement errors.

Answer 1

Endogeneity refers to a situation where the explanatory variable is correlated with the error team. The problem rises from endogeneity most of the times ignored by the research workers while doing non-experimental research.

If the variable is correlated with the error team, then OLS will be biased.

The problem of endogeneity is found in time series analysis. To address endogeneity, there is an approach which is based on instrument variable present there. We also discuss whether endogeneity sometimes matters or sometimes doesn't matter, but as the solution of the problem can be worst than the disease. Endogeneity has severe consequences of our estimation.

Error team is a variable introduced or produced by a mathematical or statistical model whose work is to create the model, and it doesn't represent the relationship between a dependent variable and an independent variable.

If you want to a minimum the error that is created or occurred then you should avoid overloading, hire skilled and sufficient staff in the organisation, double-check the work of the employees, provide a peaceful working environment to the employees of the organisation.