Dynamic Foreign Policy Behavior

How best to classify event counts of directed dyadic foreign policy behavior and how best to model them are points of disagreement among researchers. Should such series be modeled as unit roots ("perfect" memory) or as stationary ("short" memory)? It is demonstrated that the dichotomous choice between unit root (I(1)) and level stationarity (I(0)) is overly restrictive. The intermediate (and more general) possibility of fractional integration (0<I<1), a concept proven useful in studies of aggregate opinion, is applied. Results show that fractional integration is extremely common and that error correction mechanisms (ECMs) can still be appropriate in the absence of unit-root series. Fractional ECMs are used in action-reaction models of bilateral relationships to demonstrate this. Given the frequency of fractional integration, its flexibility, and the problems encountered when ignoring it, scholars should incorporate fractional integration techniques into their models.