For my thesis I will run some regression (OLS and ML: Probit). I like to distingish between variables in growth rates and variables in level form, if there is any important issue that I have to consider.
I will regress the cyclical component of the GDP on a business survey variable in order to have some short term forecasts. A feature of the cyclical component of the GDP is that it is already stationary.
The question is: What form is recommended for the GDP? Level, log of Level, growth rate, difference.
The reason I am asking is that I would like to limit the number of regressions so that I do not have to regress with both rate and level form. This is not an issue of saving work but rather of deciding for the best (or appropriate) procedure before the analysis. That is just to make sure that the theoretical and logical thoughts on the right variable form match the analysis.
Also, I will need a literature linked that explains that problem.
Thanks so far.