Nobel prize winner Franco Modigliani Essay Example | Topics and Well Written Essays - 1250 words

Nobel prize winner Franco Modigliani - Essay ExampleInstead, he opted to strike law because that was the most famous field of education during that time in Italy. While studying law, he won first prize in an essay competition that was on economics and this laid fanny for him to pursue economics in future. However, he had known that economics would not provide much luck for him in Europe because of fascist movements. Modigliani left Italy because of the fascist movements and the pact between Hitler and Stalin. From Rome, he moved to genus Paris and then to the unite States just before the World War II began. He left for the United States to pursue his studies on Economics after realizing that his efforts in Europe would be futile due to governmental turmoil. He joined the New School for Social Research in New York that provided him the scholarship to study. There, he completed his PhD in social science in 1944 and worked as assistant professor in mathematical economics and econom etrics in 1946. Between 1946 and 1960 he was associated with University of Chicago, University of Illinois, Carnegie Institute, Harvard University and Northwestern University. In 1948, he was awarded the Political Economy companionship of the University of Chicago. ... iting professor, Modigliani also worked on various other important and futuristic aspects of inter subject field finance, international payment system, repair of inflation, into various fields of finance such as credit rationing, the term structure of interest rank and the valuation of speculative assets. Modigliani, along with his student Richard Brumberg in 1954, formulated the life-cycle hypothesis of saving that was later develop by Modigliani and Albert Ando in 1963 with the use of many empirical studies. Modiglianis work on this hypothesis was revisited again in 1980. This hypothesis debates upon Maynard Keynes General Theory or the drug addiction theory that directly relates current consumption with curre nt income. Contrary to Keynesian theory, the life-cycle theory postulates that individual consumption in any time stoppage depends on resources available to the individual the rate of return on his capital and the age of the individual (Dwivedi, 159-160). On broader level, this hypothesis relates to the national economy in the way that national saving is directly linked with national income and mass of national wealth will be in proportion with the length of life scotch of working. This hypothesis made along with Brumberg was not empirically proven, and hence did not gain significance until Modigliani turn up this hypothesis along with Ando and other associates. Modiglianis hypothesized that in general, individuals tend to keep their expenditure and lifestyle constant, disregarding of their varying levels of income. This means, individuals tend to save more money when their earnings are higher and save slight when their earnings drop. When their income is higher, they tend to s pend more without assessing potential risks in future to their incomes however, if