In terms of coding, relative urls are better. It helps to increase page load speed. But, if you want to hotlink something from other sites, you must use absolute urls. Since you have posted this in Google sections, you might wanna know what's the impact of this on Google. Well, when you use third party absolute URL on your site (to hotlink a image or a file), it'll be counted as a outgoing link.
I'd use relative for every link except the homepage. That way the strongest canonical url will always be http://www.yoursite.com/ and not http://www.yoursite.com/index.html (which it would be if you use a relative url).
An absolute link defines the location of the document absolutely including the protocol to use to get the document, the server to get it from, the directory it is located in, and the name of the document itself. A relative link on the other hand takes advantage of the fact that the server knows where the current document is. Thus, if you want to link to another document in the same directory, you don't need to write out the full URL. All you need to use is the name of the file.
use only relative urls for all pages of site and link your home page with the absolute url...........don't use index.html...............use your website url to link with your home page..........
I have to use absolute URL as whenever I use relative urls google can't find the pages. For example I used to use ../page.html and in google webmaster tools I had page not found, so I had to change all links to absolute and now it's www.website/page.html. Can anybody explain why it's happening? I have visited some authrity websites and they used absolute urls.
It really doesnt make any difference. i have sites with both absolute and relative urls. both types of sites rank just fine on search engines.
On SEO terms, it doesn't make difference if you have Absolute or Relative URL, until you are pointing to the right page Relative URL's give you the freedom of code changes, in case you change your domain name etc...
As seo concerns either.. But I always use absolute urls, because if you move some parts of site or pictures or anithing on some other place, you dont have to change anything, but if you use relative urls, you are in some serious problems...