Exogenously

from Kaivan Munshi – NETWORKS IN THE MODERN ECONOMY: MEXICAN MIGRANTS IN THE U. S. LABOR MARKET (ABSTRACT) on Rap Genius

Meaning

Exogenous refers to an action or object coming from outside a system. It is the opposite of endogenous, something generated from within the system.

In an economic model, an exogenous change is one that comes from outside the model and is unexplained by the model. For example, in the simple supply and demand model, a change in consumer tastes or preferences is unexplained by the model and also leads to endogenous changes in demand that lead to changes in the equilibrium price. Similarly, a change in the consumer’s income is given outside the model. Put another way, an exogenous change involves an alteration of a variable that is autonomous, i.e., unaffected by the workings of the model.

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