Franco Modigliani

Franco Modigliani

Neo-Keynesian economics
Born	(1918-06-18)June 18, 1918 Rome, Italy
Died	September 25, 2003(2003-09-25) (aged 85) Cambridge, Massachusetts
Nationality	Italian, American
Field	Financial economics
Alma mater	New School
Influences	J. M. Keynes, Jacob Marschak
Influenced	Jacques Drèze Robert Shiller
Contributions	Modigliani–Miller theorem Life-cycle hypothesis MPS model

Franco Modigliani (Italian: [ˈfraŋko modiʎˈʎani]; June 18, 1918 – September 25, 2003) was an Italian economist naturalized American, a professor at the MIT Sloan School of Management and MIT Department of Economics who won the Nobel Memorial Prize in Economics in 1985.

Life and career

Born in Rome, Modigliani left Italy in 1939 because of his Jewish origin and antifascist views. He first went to Paris with the family of his then-girlfriend, Serena, whom he married in 1939, and then to the United States. From 1942 to 1944, he taught at Columbia University and Bard College as an instructor in economics and statistics. In 1944, he obtained his D. Soc. Sci. from the New School for Social Research working under Jacob Marschak. In 1946, he became a naturalized citizen of the United States, and in 1948, he joined the University of Illinois at Urbana-Champaign faculty.

When he was a professor at the Graduate School of Industrial Administration of Carnegie Mellon University in the 1950s and early 1960s, Modigliani made two path-breaking contributions to economic science:

• Along with Merton Miller, he formulated the important Modigliani–Miller theorem in corporate finance. This theorem demonstrated that under certain assumptions, the value of a firm is not affected by whether it is financed by equity (selling shares) or debt (borrowing money).

• He was also the originator of the life-cycle hypothesis, which attempts to explain the level of saving in the economy. Modigliani proposed that consumers would aim for a stable level of consumption throughout their lifetime, for example by saving during their working years and spending during their retirement.

In 1962, he joined the faculty at MIT, achieving distinction as an Institute Professor, where he stayed until his death. In 1985 he received MIT's James R. Killian Faculty Achievement Award.

Modigliani also co-authored the textbooks, "Foundations of Financial Markets and Institutions" and "Capital Markets: Institutions and Instruments" with Frank J. Fabozzi of Yale School of Management.

In the 1990s he teamed up with Francis Vitagliano to work on a new credit card, and he also helped to oppose changes to a patent law that would be harmful to inventors.

Modigliani was a trustee of the Economists for Peace and Security.

A collection of Modigliani's papers is housed at the Rubenstein Library at Duke University.

For many years, he lived in Belmont, Massachusetts; he died in Cambridge, Massachusetts.

Bibliography

• Modigliani, Franco (2001). Adventures of an Economist. London, New York: Texere. ISBN 1-58799-007-5. 
• Fabozzi, Frank J.; Franco Modigliani, Michael G. Ferri (1998). Foundations of Financial Markets and Institutions. Upper Saddle River, NJ: Prentice Hall. ISBN 0-13-686056-7. 
• Fabozzi, Frank J.; Franco Modigliani (1996). Capital Markets: Institutions and Instruments. Upper Saddle River, NJ: Prentice Hall. ISBN 0-13-300187-3. 
• Modigliani, Franco; Andrew B Abel, Simon Johnson (1980). The Collected Papers of Franco Modigliani. Cambridge, Mass.: MIT Press. ISBN 0-262-13150-1. 

See also

• List of economists
• List of Jewish Nobel laureates
• Modigliani Risk-Adjusted Performance

External links

• Franco Modigliani autobiography
• About Franco Modigliani from nobel-winners.com
• Memorial for Franco Modigliani - MIT Sloan
• his pioneering analyses of saving and of financial markets.
• School performance in the early years was good though not outstanding
• IDEAS/RePEc
• Arno Tausch (2005) ‚World Bank Pension reforms and development patterns in the world system and in the “Wider Europe”. A 109 country investigation based on 33 indicators of economic growth, and human, social and ecological well-being, and a European regional case study’. A slightly re-worked version of a paper, originally presented to the Conference on “Reforming European pension systems. In memory of Professor Franco Modigliani. 24 and 25 September 2004”, Castle of Schengen, Luxembourg Institute for European and International Studies