Econometrics - Nonlinear Models
5 important questions on Econometrics - Nonlinear Models
What are binary response models?
- Logit model
- Probit model
What is a probit model?
What is the rule of thumb probit to logit?
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What is a Tobit model?
y=max(y*,0)
Disadvantages of nonlinear models?
- Difficult to estimate
- interpretation of coefficients not straightforward:
- only make sense of sign of each coefficient
- for some models look at marginal effects
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