Franco Modigliani
Franco Modigliani (
June 18,
1918 –
September 25,
2003) was an
Italian-American economist at the
MIT Sloan School of Management, and winner of the
Nobel Memorial Prize in Economics in
1985.
Born in
Italy, he left Italy for the US in
1939 because of his Jewish background and antifascist views. In 1944 he obtained his Ph.D. from the
New School for Social Research working under
Jacob Marschak. In
1946, he became a
naturalized citizen of the
United States.
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 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 income throughout their lifetime, for example by saving during their working years and spending during their
retirement.
In 1962, he joined the faculty at MIT, where he stayed until his death. Among his students were Nobel laureate
Robert Merton, the 1997 winner.
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.
Active until the end, Modigliani enlisted fellow Nobel laureates
Paul Samuelson and
Robert Solow in 2003 to write a letter published in the New York Times chiding the Anti-Defamation League for honoring Italy's prime minister, Silvio Berlusconi. Berlusconi had recently defended Mussolini's conduct toward Jews during World War II.
*
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*
List of economists*
List of economics consultancies and think tanks*
Modigliani-Miller theorem
