We now consider the Tobit model that applies to the full data set a Formulate the log likelihood for this very simple Tobit model b Reformulate the log likelihood in terms of 1 and Then derive the necessary conditions for maximizing the log likelihood with respect to and c Discuss how you would obtain the values of and to solve the problem in Part b d Compute the maximum likelihood estimates of and

Question: We now consider the Tobit model that applies to the full data set. a. Formulate the log-likelihood for this very simple Tobit model. b. Reformulate

We now consider the Tobit model that applies to the full data set.

a. Formulate the log-likelihood for this very simple Tobit model.

b. Reformulate the log-likelihood in terms of θ = 1/σ and γ = μ/σ. Then derive the necessary conditions for maximizing the log-likelihood with respect to θ and γ.

c. Discuss how you would obtain the values of θ and γ to solve the problem in Part b.

d. Compute the maximum likelihood estimates of μ and σ.

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