Franco Modigliani

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Franco Modigliani
Franco Modigliani.jpg
Modigliani in 2000
Born (1918-06-18)June 18, 1918
Rome, Italy
Died September 25, 2003(2003-09-25) (aged 85)
Cambridge, Massachusetts
Nationality Italian, American
Institutions Carnegie Mellon University
University of Illinois at Urbana-Champaign
New School
Field Financial economics
School or
Neo-Keynesian economics Chicago School of economics Carnegie School
Alma mater New School
Jacob Marschak[1]
Abba Lerner[1]
Albert Ando
Robert Shiller
Mario Draghi
Lucas Papademos
Influences J. M. Keynes, Jacob Marschak
Contributions Modigliani–Miller theorem
Life-cycle hypothesis
MPS model
Information at IDEAS / RePEc

Franco Modigliani (Italian: [ˈfraŋko modiʎˈʎani]; June 18, 1918 – September 25, 2003) was an Italian-born naturalized American economist who won the Nobel Memorial Prize in Economic Sciences in 1985. He was a professor at UIUC, Carnegie Mellon University, and MIT.

Life and career[edit]

Born in Rome, Italy, Modigliani left Italy because of his Jewish origin and antifascist views, although he had previously published fascist economic papers and had personally received an award from Mussolini.[2] 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. From 1952 to 1962, he was faculty at Carnegie Mellon University, where several path-breaking contributions to economic science were made:

  • 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.
  • He has claimed that the Rational Expectations Hypothesis (REH) rests in his and Emile Grunberg's paper.[3] He has also used the concept Macro Rational Expectations Hypothesis (MREH).[4]

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.[5]

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 (2009), 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.[6]

He received an honoris causa degree in Management Engineering from University of Naples Federico II in 1997. For many years, he lived in Belmont, Massachusetts; he died in Cambridge, Massachusetts.



  • Modigliani, Franco; Abel, Andrew B.; Johnson, Simon (1980). The Collected Papers of Franco Modigliani. Cambridge, Mass.: MIT Press. ISBN 0-262-13150-1. 
  • Modigliani, Franco; Fabozzi, Frank J. (1996). Capital Markets: Institutions and Instruments. Upper Saddle River, New Jersey: Prentice Hall. ISBN 0-13-300187-3. 
  • Modigliani, Franco; Fabozzi, Frank J.; Ferri, Michael G. (1998). Foundations of Financial Markets and Institutions. Upper Saddle River, New Jersey: Prentice Hall. ISBN 0-13-686056-7. 
  • Modigliani, Franco (2001). Adventures of an Economist. London, New York: Texere. ISBN 1-58799-007-5. 
  • Modigliani, Franco; Muralidhar, Arun (2004). Rethinking Pension Reform. London: Cambridge University Press. ISBN 9780521676533. 

Journal articles[edit]

See also[edit]


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

  1. ^ a b Franco Modigliani and the Socialist State
  2. ^ "Franco Modigliani and the history of Italian fascism - Marginal REVOLUTION". Marginal REVOLUTION. 2017-02-11. Retrieved 2017-02-11. 
  3. ^ Breit, William; Spencer, Roger W. (1990). Lives of the Laureates: Ten Nobel Economists. MIT Press. 
  4. ^ The Monetarist Controversy Or, Should We Forsake Stabilization Policies? American Economic Association 1976.
  5. ^ 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. 
  6. ^ "Franco Modigliani Papers, 1936–2005 and undated, bulk 1970s–2003". Rubenstein Library, Duke University. 

External links[edit]