ARDL Model Specification

[Andy_20]

Hi, An ARDL modeling process requires the variables to be of the mixture of I(0) and I(1) i.e. stationary and trend stationary respectively. My concern where it is not clear to me is that "What guides us" on model specification under Fixed Regressors to Either opt for

1: None

2: Restricted constant

3:Unrestricted Constant

4: Restricted trend OR

5: Unrestricted constant and trend

I have annual financial data, my D.V is FDI Inflows and my I.V are exchange rate, interest rate, inflation rate and GDP Growth rate In this case also which variables can I log transform to have same level of unit for easy interpretation? Is it recommended?

MY CONCERN WAS GENERATED AFTER A KEENLY READING THE FOLLOWING AS SUGESTED BY  @sbxkoenk 

ARDL Models - Part I

https://davegiles.blogspot.com/2013/03/ardl-models-part-i.html

ARDL Models - Part II - Bounds Tests

https://davegiles.blogspot.com/2013/06/ardl-models-part-ii-bounds-tests.html

ARDL Modelling in EViews 9

https://davegiles.blogspot.com/2015/01/ardl-modelling-in-eviews-9.html

See also here : "SAS Forecasting and Econometrics" board Autoregressive Distributed Lag Model https://communities.sas.com/t5/SAS-Forecasting-and-Econometrics/Autoregressive-Distributed-Lag-Model...

Many thanks, Appreciations!

Andy_20

[sbxkoenk]

Hello,

I have moved this post to 'SAS Forecasting and Econometrics' board
as you will have a higher chance for a good answer over here.

For example an answer by @SASCom1 .

Good luck,

Koen