Ceteris paribus: Difference between revisions
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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 at the relationship between demand and price, we assume for analysis purposes that all other variables are held constant. | 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 | Making the ''ceteris paribus'' assumption in error is one of the most common sources of errors in forecasting and financial models. | ||
Revision as of 13:55, 5 May 2016
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.
