Economics' Loss


The passing away of Charles Kindleberger and Franco Modigliani last year is likely a void in the economics community which may take some time to fill up.

Many students of economics grew up with Kindlebergers Economic Development and International Economics. His prolific display of creativity and productivity as a literary economist presumably extends from a basic passion among economic thinkers to reach out to a wider audience or market and influence the way by which rational decisions are made at all levels of activities.

Thus, when Mr. Kindleberger wrote Manias, Panics and Crashes in 1976, he already hinted at the possibility of bubbles or manias in the financial world. He attributed bubbles to the basic desire to take advantage of new or emerging opportunities for profit, an initiative which may be unduly exaggerated. Consequently, investors become overly optimistic and irrational in their decisions. Sooner or later, the financial system is likely to be visited by panics and crashes. Although his analysis may seem to be a criticism of the efficient markets theory (an efficient market is a market where profit opportunities are eliminated almost instantaneously), Mr. Kindlerberger still believed that markets that markets function well enough in the main. However, markets may still be overpowered and, therefore, in need of assistance at times.

On the other hand, Franco Modiglianis credit lies principally in his formulation of a theory (together with Richard Brunberg) explaining savings decisions, the so-called life-cycle hypothesis. Mr. Modiglianis other great accomplishment has to do with the complex and vast subject of corporate finance.

As the life-cycle hypothesis puts it, people usually plan their consumption and savings over a long time horizon with the objective of allocating their consumption in the best possible way over their entire lifetime. In other words, most people opt for a stable lifestyle, that is, they try to have a consistent or similar level of consumption each year. To be able to do this, people at all levels of society (not just the rich) make an estimation of their expected lifetime income and save correspondingly. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Economics' Loss
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.