Franco Modigliani

Franco Modigliani
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
School or tradition	Neo-Keynesian 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
Information at IDEAS / RePEc

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 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.

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.

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

Bibliography

Books

• 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

• Modigliani, Franco (1998). "Lessons learned from Barbara". Feminist Economics. Taylor and Francis. 4 (3): 143–144. doi:10.1080/135457098338347.CS1 maint: ref=harv (link)

See also

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

References

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

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
• Franco Modigliani (1918–2003). The Concise Encyclopedia of Economics. Library of Economics and Liberty (2nd ed.). Liberty Fund. 2008.
• 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
• Appearances on C-SPAN