If only vs ceteris paribus presence, explained, only, government

king_kong

The way ceteris paribus is explained in the book is confusing. They use the example:

So the stock market would have crashed but for the presence of government led manipulation.
(Level III Volume 2 Behavioral Finance, Individual Investors, and Institutional Investors , 4th Edition. Pearson Learning Solutions 74).
<vbk:9780558655952#page(74)>

Aren't they also saying their analysis would have been correct if the government didn't manipulate the market? Sound like it could be the if only defense too.

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Analti_Calte

I think the "if-only" defense is used if the variable was considered, but the level of the variable is incorrect.

The "ceteris paribus" defense is used if the variable was not considered.

Although I could have the above mixed up.

cityboy

I agree with soddy - If Only is if the variable is considered in the original analysis

But I also agree that the way they present this in the book IS confusing.

mp3bu

FinNinja Wrote:
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Whenever I see your name all I hear is "Everybody was kung-fu fightyinying...melody..."

dyga

Okay, so can I sum it up as the following:

If only: I predict Fed will increase rates, but instead they decreased it.

Ceteris paribus: I predict the Fed will increase rates, but they decreased it because of inflation concerns.

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thommo77

bpdulog Wrote:
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> Okay, so can I sum it up as the following:
>
> If only: I predict Fed will increase rates, but
> instead they decreased it.
>
> Ceteris paribus: I predict the Fed will increase
> rates, but they decreased it because of inflation
> concerns.

Let's refine it a little bit more.

Professor X wrote an article: I believe that inflation will rise and this will force the fed to increase rates.

Incidence: GDP growth slowed down leading to lower inflation. Fed increased rates.

If only: if only inflation rose, the fed would have raised rates.

Ceteris paribus: There was a slow down in economic growth which forced the fed to raise rates.

Lesson: GDP growth was not considered in the analysis, therefore, all was not equal (ceteris paribus). Inflation was considered but it went the other way (if only).

aidebaobao

me.tega Wrote:
-------------------------------------------------------
> bpdulog Wrote:
> --------------------------------------------------
> -----
> > Okay, so can I sum it up as the following:
> >
> > If only: I predict Fed will increase rates, but
> > instead they decreased it.
> >
> > Ceteris paribus: I predict the Fed will
> increase
> > rates, but they decreased it because of
> inflation
> > concerns.
>
> Let's refine it a little bit more.
>
> Professor X wrote an article: I believe that
> inflation will rise and this will force the fed to
> increase rates.
>
> Incidence: GDP growth slowed down leading to lower
> inflation. Fed increased rates.
>
> If only: if only inflation rose, the fed would
> have raised rates.
>
> Ceteris paribus: There was a slow down in economic
> growth which forced the fed to raise rates.
>
> Lesson: GDP growth was not considered in the
> analysis, therefore, all was not equal (ceteris
> paribus). Inflation was considered but it went the
> other way (if only).


You just confused me even more. Is:

Ceteris paribus - some exogenous variable impacted your forecast, causing it to fail.
If only - the variables you forecasted directly went in the completely
opposite direction.

?

NO EXCUSES