Aassalam o Alakum, Friends, hope u all doing good

Today we will discuss about the ARLD model and preconditions of this Approach
using EVIEWS 9.Following is a chart which will clarify about the model section
on the base of data stationary.

In above chart ill focus on ARDL I have mention in above that we can Run ARDL
when we have our data stationary mix I.e. Few variables are stationary at level and
few ones at first difference but its also important to know that ARLD also can be
run if our variables are purely stationary at level or purely at first differences.

I have few assumptions for ARDL approach data

Data must be free from autocorrelation

Data must be free from heteroscedisty(HSK)
Data must be normal distributed
No one variable stationary at I(2)
Data should be stationery purely at level (o) or purely first difference (1) or
mixture of level and first difference.
Now lets us start applying ARDL using EVIEWS 9.
1. Step one drag you excel file on Eviews 9 icon
2. Check stationary level of your series if your series fulfill the
assumptions of ARDL then apply ARDL otherwise move for other
tests.
3. Now we have checked stationary level of our variables let suppose
variables are stationary on mixture pattern few ones stationary at level
and few stationary at first difference.
4. Go to quick ------------ select estimate equation and from bottom
and from drop down Manu select ARDL, when u will select ARDL
new window will be open.

From here I selected

ARDL option

Option
tab

From automatic
selection chose
maximum lags for
dependent and
independent
variables

Dynamic
selection
You also can
chose fixed,,

List of fixed
Regressor

The Specification tab gives you option for lags of variables in the above
screenshot we have two options for lags, first one is automatic and second is fixed,
1. if you select automatic lags then Eviews automatically chose appropriate
lags for your variables but you have to choose maximum lags for your
variables.in automatic lags selection option u can specify different lags
length for dependent variables and independent variable let suppose I can
select 6 lags for dependent and 8 for independent its all up to and next
Eviews automatically select what must be the suit able lags length for
dependent and independent variables.
2. But if we select fixed lags length then we must specify same lags length for
the both of dependent as well as independent variables.
3. List of fixed Regressor this option gives us opportunity to use all those
variables which are fixed or static variables, i.e. variables without lags.
4. Trend specification from this option u can add trend or trend and constant
or any static variable also can be specify
5. Option tab; you can chose the Akaike Information Criterion (AIC),(SC),
(HQ), or the Adjusted R-squared.

6. Dynamic selection in this area we write our equation dependent first and
then all independent variables.
Let suppose I write my equation and go-ahead.

I selected automatic lags lent criteria and used maximum 4 lags and all things remain unchanged because
which option I was required selected by default but you can change according to different situation, its
all depend u how much maximum lags u should include,, after this Eviews automatically select lags,,, I do
ok and proceed.

Here are results we can see , I

have include 4 lags but Eviews
automatically select 4 for
dependent variables , while
three for FDI independent
variables etc.

In above results we can see that we have use AIC for the optimal lag lengths
we see how AIC chose these lags ,we will check it with the help of graph, go
to views of above resulted window ---model summarygraph.

See the numbers of lags and same our

results are indicating that for dependent
variables 4 lags suitable while same for fdi ,
gdp and lie,,
On these lags AIC is minimum

Now we have need F-STATISTICS value so that we can conform we can move
further or not,,,,
For F statistics we will go in above resulted windows views-----coefficient diagnostic--bound test

F-statistic value tells about the cointegression

among variables if F value comes less than
critical bound values then we conclude that
there is no cointegression among variables.
There is different critical value of bound on
different level of confidence; here our F value is
above from upper and lower bound test so we
can say there is cointegression in our variables.
Not if our F values come less than critical value
must do add or remove variables or adopt any
other way.

Conclusion from above results we can conclude that there is cointegression in our variables.

So we move on for long run relationship. Go to view of resulted window or

above window ----coefficients diagnostic----cointegression and long run form

Here we can see

long run relation
Note:coineq(-1)
must be negative
and significant,,

Further we can check serial correlation, heteroscedisty

or normality of data etc.
Thank you so much for being with me
Best of luck