Astrology and economic forecasts

The current crisis has once again shown how wrong economic forecasts often are. So why is it such a deeply flawed profession? John Galbraith once said that “The only function of economic forecasting is to make astrology look respectable.” Although many of us are avid readers of economic forecasts issued by the OECD, the IMF, and the EU (the government’s forecasts tend to suffer from a general lack of creditability), it is questionable if our confidence in them is well founded. In my opinion, which is based on my experience, it is not.

Firstly, a large number of economic models try to predict the future by extrapolating the past. The current crisis, like so many others, has highlighted the folly of this method. Such models also predicted in the 1950s that the USSR would become the world’s most powerful economy (its economic growth rate was three times that of the west at the time), and the same was said about Japan (remember the best seller Japan as Number 1, by Harvard Professor Ezra Vogel?), the Asian dragons in the 90s, and now it’s China’s turn. The logic of projecting past growth rates onto the future is an intellectual and economic fallacy, as stated by Paul Krugman in his excellent paper “The Myths of Asia’s Miracle”. 

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IE Master in Finance ranked No. 2 worldwide by FT

IE Business School holds the No. 2 position in the Financial Time ranking of Masters in Finance programs.

The IE Master in Finance achieved this result in the pre-experience category with its full-time English-taught program, aimed at young professionals with an international profile. The student body of IE’s Master in Finance program comprises 95% international students from 23 countries, and takes place in Madrid and New York.  It is the first finance program in Spain to be awarded the status of Program Partner by the CFA (Chartered Financial Advisor) Institute, the leading international standard for financial analysts.

Ignacio de la Torre, Director of Masters in Finance at IE Business School says that the finance sector needs specialized profiles with an international focus. “This is exactly what our programs provide, and our graduates work in firms like UBS, Morgan Stanley, Credit Suisse, Waterland and BCG. Emerging economies also offer enormous potential given the rapid development of their capital markets.”

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IE Focus || Speculating with Facebook

IE Focus | By Enrique Dans, Professor at IE Business School The spectacular valuations of social networks bear a striking resemblance to what happened during the dotcom bubble, including some of the key players. What makes a company like Goldman Sachs value Facebook at the spectacular figure of €50 billion? Along with a number of…

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Do you need solid knowledge of Finance?

Here is the dilemma: you need more acumen of Finance but either your family or your professional environment does not allow you to step out for one year to gain that knowledge. Sounds familiar? Now. Here is the solution: IE launches this fall the Global Master in Finance, a 14 month blended Master Degree 100%…

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Design thinking – for MBA only!

The IE International MBA starts with an innovative, constantly changing module called LAUNCH. In past edition, students had to play basketball, talk like actors and develop their creative side guided by the Architecture Association of London.

In this year edition, the IE School of Architecture created a workshop related to Design Thinking. Enjoy the video!