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A Test of the Tobit Specification Against an Alternative Suggested by Cragg

Tsai-Fen Lin; Peter Schmidt

The Review of Economics and Statistics 1984

In this paper we present a specification test for the Tobit model. Specifically, we test the Tobit model against the alternative of a two-part model in which one set of parameters determines the probability of a limit observation while a second set of parameters determines the distribution of the non-limit observations. An advantage of our test is that it is easily calculated from the Tobit residuals.

DOI
10.2307/1924712
Volume
66 (1)
Pages
174
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