Statistical method
Also known as control function method
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Control functions are statistical methods to correct for endogeneity problems by modelling the endogeneity in the error term. The approach thereby differs in important ways from other models that try to account for the same econometric problem. Instrumental variables, for example, attempt to model the endogenous variable X as an often invertible model with respect to a relevant and exogenous instrument Z. Panel analysis uses special data properties to difference out unobserved heterogeneity that is assumed to be fixed over time.