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Friday, May 22, 2015

Maximum Likelihood Estimation & Inequality Constraints

This post is prompted by a question raised by Irfan, one of this blog's readers, in some email correspondence with me a while back.

The question was to do with imposing inequality constraints on the parameter estimates when applying maximum likelihood estimation (MLE). This is something that I always discuss briefly in my graduate econometrics course, and I thought that it might be of interest to a wider audience.

Here's the issue.