Which of the following is most likely not a factor that would cause endogeneity (fixed effect is zero) when examining the relationship of bilateral trade (dependent) and trade alliances (independent).
A) Shared language
B) Distance between trading partners
C) Regime type
D) Inflation rate

Question

Quizplus · Accepted Answer

Inflation rate is not likely to be a factor that causes endogeneity in the relationship between bilateral trade and trade alliances. Factors such as shared language, distance between trading partners, and regime type could potentially cause endogeneity issues.

Which of the Following Is Most Likely Not a Factor