I am an undergraduate student working on an empirical project about the effect of FDI inflows on GVC integration in Egypt, using annual data from 1995–2023 (29 observations). My dependent variable is a GVC participation index, and I have around 6 control variables.
I initially planned to estimate an ARDL model, but I realized that endogeneity may be an issue. Because of that, I considered using a VARX model, but the sample size is quite small, and adding several controls will quickly reduce the degrees of freedom.
Given that:
I initially planned to estimate an ARDL model, but I realized that endogeneity may be an issue. Because of that, I considered using a VARX model, but the sample size is quite small, and adding several controls will quickly reduce the degrees of freedom.
Given that:
- I have annual data with a small sample (≈29 observations)
- I have several control variables
- There may be reverse causality between FDI and GVC participation
- My econometrics level is undergraduate
