Franco Modigliani

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Franco Modigliani
Neo-Keynesian economics
Franco Modigliani.jpg
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
William A. Barnett
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[edit]

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 (1958). 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.[1]

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.

He is the co-author of Rethinking Pension Reform (2004), Cambridge University Press, and along with Arun Muralidhar, critiqued the privatization model of Social Security reform proposed by the World Bank (in the 1990s) and President Bush in the early 2000s, and offered a better alternative to reform Social Security systems globally.

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.[2]

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

Bibliography[edit]

  • 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. 

Franco Modigliani and Arun Muralidhar, "Rethinking Pension Reform," Cambridge University Press, London, UK, 2004

See also[edit]

References[edit]

Franco Modigliani and Arun Muralidhar, "Rethinking Pension Reform," Cambridge University Press, London, UK, 2004

  1. ^ Fabozzi, Frank J.; Frank J. Jones, Franco Modigliani (2010). Foundations of Financial Markets and Institutions (Fourth Edition). Pearson Education, Inc. pp. Dedication. ISBN 0-13-613531-5. 
  2. ^ "Franco Modigliani Papers, 1936–2005 and undated, bulk 1970s–2003". Rubenstein Library, Duke University. 

External links[edit]