Refer to Problem 7.11. Suppose you extend the Cobb-Douglas production function model by including the trend variable X4, a surrogate for technology. Suppose further that X4 turns out to be statistically significant. In that case, what type of specification error is committed? What if X4 turns out to be statistically insignificant? Present the necessary calculations.
Problem 7.11
In Yt = B1 + B2 In X2t + B3 In X3t + ut
where In = the natural log.