Franco Modigliani

Franco Modigliani (18 June 1918 – 25 September 2003)

He entered university at the age of seventeen, enrolling in the faculty of Law at the Sapienza University of Rome.^[3] In his second year at Sapienza, his submission to a nationwide contest in economics sponsored by the official student organization of the state, won first prize and Modigliani received an award from the hand of Benito Mussolini.^[2][4] He wrote several essays for the fascist magazine Lo Stato^[5] where he showed an inclination for the fascist ideological currents critical of liberalism.^[6]

Among his early works in Fascist Italy was an article about the organization and management of production in a

Modigliani, beginning in the 1950s, was an originator[9] of the life-cycle hypothesis, which attempts to explain the level of saving in the economy.^[10] The hypothesis that consumers aim for a stable level of consumption throughout their lifetime (for example by saving during their working years and then spending during their retirement).

The rational expectations hypothesis is considered by economists^[11] to originate in the ^[12] paper written by Modigliani and Emile Grunberg in 1954.^[13][14]

When he was a member of the Carnegie Mellon University faculty, he formulated in 1958, along with Merton Miller, the Modigliani–Miller theorem for corporate finance.^[15][16] The theorem posits that, under certain assumptions,^{[note 2]} the value of a firm is not affected by whether it is financed by equity (selling shares) or by debt (borrowing money), meaning that the debt-to-equity ratio is unimportant for private firms.^[15][16]

In the early 1960s, his response,^[17] co-authored with Albert Ando, to the 1963 paper^[18] of Milton Friedman and David I. Meiselman, initiated the so-called "monetary/fiscal policy debate" among economists, which went on for more than sixty years.^{[citation needed]}

In 1975, Modigliani, in a paper^[19] whose co-author was his former student Lucas Papademos,^{[note 3]} introduced the concept of the "NIRU", the non-inflationary rate of unemployment,^{[note 4]} ostensibly an improvement over the "natural rate of unemployment" concept.^[20] The terms refer to a level of unemployment below which inflation rises.^{[note 5]}

In 1997, Modigliani and his granddaughter, Leah Modigliani, developed what is now called the "

A collection of Modigliani's papers is housed at Duke University's Rubenstein Library.^[25]

Criticism

Modigliani's work on fiscal policy came under criticism from followers of

• Modigliani, Franco; Abel, Andrew B.; Johnson, Simon (1980). The Collected Papers of Franco Modigliani. Cambridge, Massachusetts:
  ISBN 978-0-262-13150-6
  .
• Modigliani, Franco; Fabozzi, Frank J. (1996). Capital Markets: Institutions and Instruments. Upper Saddle River, New Jersey: Prentice Hall.
  ISBN 978-0-13-300187-7
  .
• Modigliani, Franco; Fabozzi, Frank J.; Ferri, Michael G. (1998). Foundations of Financial Markets and Institutions. Upper Saddle River, New Jersey:
  ISBN 978-0-13-686056-3
  .
• Modigliani, Franco (2001). Adventures of an Economist. London, New York: Texere.
  ISBN 978-1-58799-007-6
  .
• Modigliani, Franco; Muralidhar, Arun (2004). Rethinking Pension Reform (PDF). London: Cambridge University Press.
  ISBN 978-0-521-83411-7
  .

• Modigliani, Franco (1944). "Liquidity Preference and the Theory of Interest and Money". Econometrica. 12 (1): 45–88.
  JSTOR 1905567
  .
• Modigliani, Franco (1998). "Lessons learned from Barbara". Feminist Economics. 4 (3): 143–144.
  doi:10.1080/135457098338347
  .

• Piero Sraffa
• List of Jewish Nobel laureates

Notes

References

1. ^ Adams, Richard (1 October 2003). "Franco Modigliani". The Guardian. Retrieved 18 August 2021.
2. ^ ^{a b} "Franco Modigliani" by Daniel B. Klein and Ryan Daza, in "The Ideological Migration of the Economics Laureates", Econ Journal Watch, 10(3), September 2013, pp. 472–293
3. ^ Parisi, Daniela (2005) "Five Italian Articles Written by the Young Franco Modigliani (1937–1938)", Rivista Internazional di Scienze Sociali, 113(4), pp. 555–557 (in language)
4. ^ ^{a b} Franco Modigliani, autobiographical notes, Nobel Prize organization website, 1985
5. S2CID 213105744
   .
6. ^ Luca Michelini, Il nazional-fascismo economico del giovane Franco Modigliani, Firenze, Firenze University Press, 2019
7. ^ ^{a b} Mongiovi, Gary (2015) "Franco Modigliani and the Socialist State Archived 2020-11-28 at the Wayback Machine", Economics & Finance Department, St. John's, May 2015
8. ^ ^{a b c} Professor Franco Modigliani, obituary, The Independent, 28 September 2003
9. ^ Modigliani, Franco & Richard H. Brumberg (1954) "Utility analysis and the Consumption Function: An Interpretation of Cross-Section Data", Kenneth K. Kurihara (editor) Post-Keynesian Economics, New Brunswick: Rutgers University Press, 1954, pp. 388–436
10. JSTOR 40969831
    .
11. ^ Wade-Hands, Douglas (1986) Modigliani And Grunberg : A Precursor To Rational Expectations?, University of Puget Sound
12. ISBN 9780444868367
13. ^ Grunberg, E. & Franco Modigliani (1954) "The Predictability of Social Events," Journal of Political Economy, 62, pp. 465–478, December 1954
14. ISBN 978-0262023085
    .
15. ^
    The American Economic Review, Vol. XLVIII, June 1958, #3, pp. 261–297. The article was a revised version of a paper delivered at the annual meeting of the Econometric Society
    in December 1956.
16. ^
    The American Economic Review
    , Vol. 53, No. 3, June 1963, pp. 433–443
17. The American Economic Review
    , 55.4, pp. 693–728
18. et al
    , Englewood Cliffs, NJ: Prentice-Hall: 1963, pp. 165–268
19. JSTOR 2534063
    .
20. ^ Coe, David T. "Nominal Wages. The NAIRU and Wage Flexibility" (PDF). Organisation for Economic Co-operation and Development.
21. ^ Modigliani, Franco & Leah Modigliani (1997) "Risk-Adjusted Performance", The Journal of Portfolio Management, Winter 1997, 23 (2), pp. 45–54
22. ^ Press Release, Nobel Prize Organisation, 15 October 1985
23. ISBN 978-0-13-613531-9
    .
24. ^ The Newsletter for Economists Allied for Arms Reduction Archived 2016-04-09 at the Wayback Machine, Vol. 12, 1, April 2000
25. ^ "Franco Modigliani Papers, 1936–2005 and undated, bulk 1970s–2003". Rubenstein Library, Duke University.
26. ^ Mitchell, William (2016) "The Modigliani controversy: The break with Keynesian thinking", 21 January 2016
27. ^ E.g. Modigliani Andre & Franco Modigliani (1987) "The Growth of the Federal Deficit and the pole of public attitudes", Public Opinion Quarterly, Volume 51, University of Chicago Press, pp. :459–480
28. ^ Blejer, Mario I.Adrienne Cheasty (1993) "How to measure the fiscal deficit : analytical and methodological issues", Washington, DC : International Monetary Fund
29. ^ Modigliani, Franco (2000) "Europe"s Economic Problems", Carpe Oeconomiam Papers in Economics, 3rd Monetary and Finance Lecture, Freiburg, 6 April 2000
30. ^ Mitchell, William (2011) "Lies, damned lies, and statistics", 13 July 2011
31. Sloan School of Management" : from Pagano, Marco (2005) "The Modigliani-Miller Theorems: A Cornerstone of Finance
    ", Center for Studies in Economics and Finance, May 2005
32. ^ "Chilmarker Serena Modigliani, 91, Escaped Fascism", Vineyard Gazette, 9 October 2008
33. ^ Serena Calabi obituary, The Boston Globe, 24 September 2008

External links

Wikimedia Commons has media related to Franco Modigliani.

Wikiquote has quotations related to Franco Modigliani.

• "Franco Modigliani (1918–2003)".
  Library of Economics and Liberty (2nd ed.). Liberty Fund
  . 2008.
• Modigliani works, IDEAS/RePEc
• Appearances on C-SPAN
• "What influences our likelihood to save?", Union Bank of Switzerland website, with filmed interviews by Franco Modigliani
• Works by or about Franco Modigliani at Internet Archive
• Franco Modigliani on Nobelprize.org

Awards
Preceded by Richard Stone	Laureate of the Nobel Memorial Prize in Economics 1985	Succeeded by James M. Buchanan Jr.