What are the difficulties in estimating the following model? Use as much detail as possible in answering this question while considering the Gauss-Markov assumptions and OLS estimator.   Economic productivity = β0 + β1Unemployment + β2Innovation + θiControls + ei   Where unemployment is the average unemployment rate of a country and innovation is an index of R&D performance.

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What are the difficulties in estimating the following model? Use as much detail as possible in answering this question while considering the Gauss-Markov assumptions and OLS estimator.

 

Economic productivity = β0 + β1Unemployment + β2Innovation + θiControls + ei

 

Where unemployment is the average unemployment rate of a country and innovation is an index of R&D performance.  

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