Hello there goods friends, I am modeling factors for FDI Decision by analyzing macroeconomic indicators namely Inflation rate(%), GDP growth rate(%), exchange rate(TZS/USD), interest rate(%) as Independent Variables against FDI INFLOWS (Million USD), the dependent variable. The EXCHANGE RATE and Real GDP Growth rate series seem to follow a normal distribution but rest do not. The problem comes in transforming the data already in percentage into logarithm whose coefficients are interpreted as percentage change, can do that? What are possible consequences? NB: All of the observations are positive but with some Variable having outliers. I opted to use ARDL MODEL as the data are integrated of mixed orders I(0) and I(1)...! I now ask you help me if I can transform the data to esnure normality as well as reduce the Heteroskedasticity on the error term Thank you in advance, Blessings
... View more