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Data collected by means of households' expenditure survey may present a large proportion of zero expenditures due to many households recording, for one reason or another, no expenditure for some items. Since the seminal paper of Tobin (1958), a large econometric literature has been developed to deal correctly with this problem of zero observations. In particular, a good selection mechanism was introduced by Cragg (1971) and a purchasing mechanism by Deaton and Irish (1984). We propose an encompassing approach with a general three equations model for which a zero expense can be observed either because:

• the good is not selected,
• the good is selected but not consumed because of lack of financial resources,
• the good is selected and consumed, but purchased infrequently so that no expense is observed during the period of the survey.

mhurdle provides a set of tools to estimate (by maximum likelihood) and test (using especially Vuong test) this generalized hurdle model.

mhurdle is on CRAN.

install.packages("mhurdle")

For the development version, use

install.packages("devtools")
devtools::install_github("ycroissant/mhurdle")