Franco Modigliani

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Franco Modigliani

Born	June 10, 1918 Rome
Died	September 25, 2003 Cambridge, Massachusetts
Residence	USA
Field	Finance
Institution	Massachusetts Institute of Technology
Academic advisor	Jacob Marschak
Known for	Modigliani-Miller theorem
Notable prizes	Nobel Prize in Economics (1985)

Franco Modigliani (June 18, 1918 – September 25, 2003) was an Italian-American economist at the MIT Sloan School of Management and MIT Department of Economics, 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, 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 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, achieving distinction as an Institute Professor, where he stayed until his death. Among his students was 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.

[edit] 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

[edit] See also

• List of economists
• Modigliani-Miller theorem

Persondata
NAME	Modigliani, Franco
ALTERNATIVE NAMES
SHORT DESCRIPTION	Economist
DATE OF BIRTH	June 10, 1918
PLACE OF BIRTH	Rome
DATE OF DEATH	September 25, 2003
PLACE OF DEATH	Cambridge, Massachusetts