Franco Modigliani

Franco Modigliani (June 18, 1918 - 25 September 2003) is a figure the United States-born Italian who won the Bank of Sweden Prize in Economic Sciences in memory of Alfred Nobel in 1985 for the second donation. The first is the "analysis of the behavior of household savers". In the early 1950s Modigliani, who tried to fix the Keynesian consumption function, introduced the "life cycle" model of consumption. The basic idea is the general view, but less powerful for that reason. He said most people want to have a sufficient level of consumption stbil. For example, if they are low income in the year, but high hopes next year, they did not want to live like paupers. Then in the early years of high earnings, Modigliani stated, people to save. They spend more of their income in the years of low earnings. Because the revenue begins to fall for a young person just starting out, then increased in mid-year, and decreases in retirement, said Modigliani, young people borrow to spend his income, saving a lot of middle-aged people, and parents spend their savings.


The second donation makes Modigliani won the Nobel Prize is the Modigliani-Miller theorem is well known in financial loss. Modigliani, along with Merton Howard Miller, showed that under certain assumptions, the value of a company free of debt to equity ratio.


Modigliani also wrote one article that began the study of rational expectations economy. In the article he published in 1954 and Emile Grumburg explain that one might anticipate certain government policies and laws accordingly. Although Modigliani very objections on rational expectations of how far the study has been running with this basic insight.


Modigliani consider yourself as a follower of John Maynard Keynes. A cartoon on his office door in 1982, said: "With your permission, brother, I would like to offer a good word for the benefit of John Maynard Keynes." Modigliani left Italy that fascism ruled in 1939 because he was Jewish and antifascist. He received the Ph.D. from the New School of Social Research in 1944. Modigliani taught there from 1944 to 1949 and is a research adviser for the Cowles Commission at the University of Chicago from 1949 until 1952. He is a professor at the Carnegie Institute of Technology from 1952 to 1960, at Northwestern University from 1960 to 1962, and at MIT from 1962 until his death. He is the head of the American Economic Association in 1976.