Definition 2.
An element in a model. For example, in the model RS&Pt+1 = a + b Tbillt + et, where RS&Pt+1 is the return on the S&P in month t+1 and Tbill is the Tbill return at month t, both RS&P and Tbill are "variables" because they change through time; i.e., they are not constant.
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