Ceteris paribus

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Financial modelling and forecasting - spreadsheet risk.

A simplifying assumption in economic analysis that other variables remain unchanged, with the exception of a very small number of variables under review.

For example, looking simplistically at the relationship between demand and price, we might assume for analysis purposes that all other variables are held constant.


Making the ceteris paribus assumption in error is one of the most common sources of errors in forecasting and financial models.


See also