Trouble with Critical Bounds in ARDL Model
Posted: Thu May 03, 2018 9:38 pm
Dear Colleagues
I am currently running an ARDL model where I look at the sources of economic growth. My research is estimating a linearised version of the Cobb-Douglas production function with an "unpacked" TFP variable. The variables I have included in my model as part of the TFP variable are:
Real Government Revenue,
Real Government Expenditure,
Real Foreign Direct Investment,
CPI Inflation,
Openness (import + export) ratio of GDP and
Real Official Development Assistance (ODA).
In addition to the above variables, I have three other variables in my model, namely:
Real Capital Stock,
Real Gross Domestic Production (GDP) and
Total Employment
When I run my ARDL model, my K=8. After I estimate the model and run the long-run results. The attached table appears.
What could be the reason that the critical bounds from Narayan are all -1?
Note: When I drop one of the variables, the Narayan critical bounds improve to those that are more familiar.
Is there a maximum number of variables that can be included in the ARDL?
I am currently running an ARDL model where I look at the sources of economic growth. My research is estimating a linearised version of the Cobb-Douglas production function with an "unpacked" TFP variable. The variables I have included in my model as part of the TFP variable are:
Real Government Revenue,
Real Government Expenditure,
Real Foreign Direct Investment,
CPI Inflation,
Openness (import + export) ratio of GDP and
Real Official Development Assistance (ODA).
In addition to the above variables, I have three other variables in my model, namely:
Real Capital Stock,
Real Gross Domestic Production (GDP) and
Total Employment
When I run my ARDL model, my K=8. After I estimate the model and run the long-run results. The attached table appears.
What could be the reason that the critical bounds from Narayan are all -1?
Note: When I drop one of the variables, the Narayan critical bounds improve to those that are more familiar.
Is there a maximum number of variables that can be included in the ARDL?