The Likelihood Function
Below are the likelihood and log likelihood functions for a type I Tobit. This is a Tobit that is censored from below at when the latent variable . In writing out the likelihood function, we first define an indicator function where:
Next, we mean to be the standard normal cumulative distribution function and to be the standard normal probability density function. For a data set with N observations the likelihood function for a type I Tobit is
Read more about this topic: Tobit Model
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