Hi everybody I am running regression analysis on eviews
I have some questions I wander if you could give me some directions and hints
SO I have panel data (10 countries and 15 years, strongly balanced)
according to Hausman test Fixed effect model appropriate
but I have non-stationary variables (both dependent variable and independent variables)
and all are stationary at first difference.
I run regression analysis with non stationary variables and got quite satisfactory results for myself(significant at level)(output of test is attached)
from one source I found out that even variables are not stationary(assumption: assuming all are stationary at first difference) we could run regression analysis with non-stationary variables and can accept model when our Durbin-Watson statistic is high than our R-squared(in my case it DW statistic is 1.18 and R-squared 0.80) and residuals are stationary(in my case it is stationary). So based on these assumptions can I accept my model as final model and make a conclusion based on test results or should I take another direction. By another direction I meant transform all my variables into first difference and run test again with first differed variables.
Test result was attached.
Please give me suggestion
thank you in advance
R. Aziz
Long-run relationship
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Long-run relationship
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