----------------- HES POSTING ----------------- In a message dated 99-09-27 20:11:01 EDT, Alan Freeman wrote: << It seems to me that the question 'what is endogenous to the market' is co-terminous with the ontological question 'what is a market'? Since this is in a sense the definition of the subject matter of economics, it strikes me as a significant deficiency that the distinction is used so much, and seems to be discussed so little. >> Just a quick reply to what is an interesting and complex question. When characterizing a market and the market process, we specify variables and the relationships between them. The magnitudes of one or more of the variables are "determined" within the four corners of the model that we build---we call these endogenous variables. Other variables have values or specific limits on their values stated at the outset before the model is set to work. These values are specified as ocurring outside the model ---they are exogenous variables. The river flows within banks of the river that do change---are always changing to some extent---but for some purposes of analysis can be considered fixed or permanent. These (the banks) are therefore exogeneous to the model of the river and our model of how its flows. To summarize, what is exogenous and endogenous is imposed on the real world by the human mind. Characterizing variables one way or another way does not commit oneself to any ontological description of the world and the way it works. One can argue that models that continually help us understand the world and make that world comprehensible must (therefore) capture something fundamental about the world and the way it actually works. This position might be contrasted with view that the model tells us more about the way our minds work and less about the world itself. Still, I think it is possible to separate any ontological description of the world from the more limited question about what constitutes explanatory success in the social sciences. There is always the broader set of questions about what is science and its relationship to truth or true understanding. Laurence S. Moss ------------ FOOTER TO HES POSTING ------------ For information, send the message "info HES" to [log in to unmask]