Estimation based on the probit model, Microeconomics

Assignment Help:

Let {(yi; xi); 1 ≤ i ≤ n} be an i.i.d sequence of random variables where yi and xi satisfy the linear relationship yi = β0 + β1xi +i with Cov(xi;i) = 0 and yi {0, 1} (i.e. yi is a binary dependent variable).

(a) Describe the main limitations of estimating β1 via OLS.

(b) Describe an alternative approach to estimation based on the Probit Model. Note that I expect you to be able to formulate the likelihood function.


Related Discussions:- Estimation based on the probit model

Economics 304 , 1. Implicit and explicit revenues minus implicit and explic...

1. Implicit and explicit revenues minus implicit and explicit costs equals: A. accounting profit. B. economic profit. C. zero profit. D. implicit profit. 2. A business owner mak

What are the two main forms of economic distribution, What are the two main...

What are the two main forms of economic distribution? What is the difference between them?   The two major forms of economic distribution are exchange and transfer. Exchange in

Distributive bargaining, Distributive Bargaining An approach to negoti...

Distributive Bargaining An approach to negotiation that finds to divide up a fixed amount of resources.

The law diminishing marginal utility, the law diminishing marginal utility ...

the law diminishing marginal utility explain through flow chart

What do you mean by bond, Q. What do you mean by Bond? Bond: A financia...

Q. What do you mean by Bond? Bond: A financial security that represents promise of its issuer (generally a company or a government) to repay a loan over a specified time period

Individual deman curves for two perfectly competitive market, Individual de...

Individual demand curves for two perfectly competitive market TC1=10q1+1/2q1^2+100 = firm 1 TC2=10q2+q2^2+100

HDI, how to write an assignment on Human development index

how to write an assignment on Human development index

Causes of inflation, Causes of inflation: Excessive growth in wages ...

Causes of inflation: Excessive growth in wages relative to productivity can cause inflationary pressures. This causes aggregate demand to increase relative to aggregate supp

What is micro economics, Micro economics is the study of individual unit of...

Micro economics is the study of individual unit of an economy

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd