Bound test - Collinearity Issue

[Rose Banda]

Hello,

I am trying to run the bounds test for cointegration.

I have performed

varsoc depvar indpvars

to get the optimal lag and I get 4

I then try to run the ardl using

ardl depvar indpvars, maxlags(4) aic

I get the following:

note: L2.lpopd omitted because of collinearity
note: L4.lpopd omitted because of collinearity
note: L3.lpopg omitted because of collinearity
note: L4.lpopg omitted because of collinearity
Collinear variables detected.

I don't know how to fix this. How do I go about doing this. sorry I am new to state and ARDL and can't seem to find an appropriate answer on internet search

[Rose Banda]

Additional information: I have a total of 25 observations

PLEASE HELP

[Justin Niakamal]

Because you have 25 observations, you'll need to restrict maxlags() to 2 or possibly 1.You're trying to estimate too many parameters with not enough data. I would suggest trying to get higher frequency data such as quarterly/monthly (unfortunately this is easier said than done). The reason for this is with such a limited lag structure you run the risk of possibly under specifying the model.

[Rose Banda]

Thanks Justin. The data for the variables of interest. co2 is only available for 25 years