Dear Researchers
Like normal regression, we calculate Unit root and Cointegration tests but it is really important to run Unit root and other tests to make equation healthy while calculating gravity model of trade.
Dear Saqib,
The condition of testing the stationarity is essential as it directs to the appropriate method of estimating the coefficients of the model. A spurious regression can be dangerous for making inferences.
Best Wishes
Dear Saqib
You should test for unit roots and cointegration tests even if the econometric model is based on an economic model. This is necessary as non-stationary data will give you spurious regressions unless the variables are cointegrated.
Thanks.
Shafiullah
Dear Saqib,
The condition of testing the stationarity is essential as it directs to the appropriate method of estimating the coefficients of the model. A spurious regression can be dangerous for making inferences.
Best Wishes
Muhammad Shafiullah & Muhammad Atif
Thank you so much for your suggestions. But i have seen many articles in world-class journals when they deal with Gravity they do not really care about Unit root testing or mentioning anywhere in research. That's the reason i have raised a question here.
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