Control variable?!

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iboha
Posts: 11
Joined: Fri Apr 11, 2014 11:35 pm

Control variable?!

Postby iboha » Sat May 16, 2015 5:24 am

Hi,everyone, I am a bit confused on how to use control variable.
For example, if I am studying on the relationship between economic growth and energy consumption, and I would like to use capital stock(K) and labor(L) as the control variables. So in VAR setting(e.g. Eviews), I tend to put K and L in the exogenous variables box.However, can any expert explain what is the rationale behind it please?
In fact, I tried to put K and L in the exogenous variables box. Then I proceed but I found that there is no lag terms for these two control variables. Help please!Thank you in advance!

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