Modigliani He was the son of a Jewish doctor. He initially studied law, but fled fascist Italy in 1939 to the United States and became an American citizen in 1946. He studied economics at the New School for Social Research and obtained a doctorate there in 1944. Modigliani later taught at various universities in the United States. United, and he joined the faculty of the Massachusetts Institute of Technology in 1962, becoming a professor emeritus in 1988.
Modigliani He was awarded the Nobel Prize for his pioneering research in various fields of economic theory that had practical applications. One of these was his analysis of personal savings, called the life cycle theory. The theory postulates that individuals build a pool of wealth during their working youth, not to pass on these savings to their descendants, but to consume them during their own old age. The theory helped explain variable rates of saving in societies with relatively young or older populations and was useful in predicting the future effects of various pension plans.
He also conducted important research with the American economist Merton H. Miller on financial markets, particularly on the respective effects that the financial structure of a company (for example, the structure and size of its debt) and its future profit potential will have on the market value of your inventory. They found, in the call Modigliani-Miller theorem, that the market value of a company depends mainly on the expectations of investors about what the company will earn in the future; the company’s debt-to-equity ratio is less important. This postulate gained general acceptance in the 1970s, and the technique that Modigliani invented to calculate the value of the expected future earnings of a company, it became a basic tool in corporate decision making and finance. In 2001, Modigliani’s autobiography was published, Adventures of an Economist.
Franco Modigliani died on September 25, 2003 in Cambridge, Massachusetts, USA.