Tobit model explained: censored regression (Excel)

How to estimate a regression model when the dependent variable is truncated or censored? This is a common problem when estimating, for example, consumption or dividend payouts that cannot be negative. Tobit model, developed by James Tobin, is a go-to technique in this case, that uses modified maximum likelihood to tackle this issue. Today, we are learning how to apply the Tobit model in Excel using a real-world example.

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