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itslarajean
Fluorite | Level 6
I am currently studying the relationship between happiness index during COVID and some other macroeconomic variables. I would like to predict the happiness index by a VAR model with a few macroeconomic variables (i.e. unemployment, GDP) and a dummy (which is 1 = COVID and 0 = normal) whereby COVID is the hardest hit times during COVID technically Year 2020 - 2021.

SHould I set DUMMY as an exogenous variable in my VAR model since I have a preset values which I know and does not need the model to predict for me. Also, technically by setting the DUMMY as an endogenous variable, does it make sense that I let a VAR model predict a dummy (Yes/No outcome)?

Appreciate guidance as I am still new to this.

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