The hurdle models choice between truncated normal and lognormal

Ai-Chi Hsu and Shu-Chin Liu

Applied Economics, 2007, vol. 40, issue 2, 201-207

Abstract: The purpose of this article is to compare and evaluate statistical models for corner solution applications of censored regression. Generally, a double-hurdle model is better than one-part model. Cragg (1971) suggests a double-hurdle model, the truncated normal model, is widely used. However, the lognormal model is easy to have the economic interpretation than the Cragg's model. We use the simulation and empirical data to test both the models. The results show that the lognormal model is usually more robust than the truncated normal model. While the lognormal model has valuable application in censored data, its potential usefulness should not be overlooked.

Date: 2007
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DOI: 10.1080/00036840600749581

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