Ceteris Paribus

Definition: Ceteris Paribus means "assuming all else is held constant". The author using ceteris paribus is attempting to distinguish an effect of one kind of change from any others.

The term "ceteris paribus" is often used in economics to describe a situation where one determinant of supply or demand changes while all other factors affecting supply and demand remain unchanged. Such an "all else being equal" analysis is important because it allows economists to tease out specific cause and effect in the form of comparative statics, or analysis of changes in equilibrium. In practice, however, it is often difficult to find such "all else being equal" situations because the world is complicated enough that it is typical for many factors to change at the same time. That said, economists can use various statistical methods in order to simulate a ceteris paribus situation in order to estimate cause and effect relationships.

Terms related to Ceteris Paribus:

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