I'm investigating the determinants of economic growth of my country. Some of them are of long term other are of short term. For that I'm trying to construct an ARDL model, but I'm confused about the right variables to choose and whether I implement them in difference in level or difference in logarithm.
I found out that we use the logarithm of real GDP in differences which tend to represent the growth rate. The explicative variables are foreign direct investment credits to private sector education spending health spending.
My question is: if I'm using real GDP as a response variable, do I have to use deflated explicative variables? Or it's better to use nominal GDP and nominal explicative variables?