MIT Sloan School of Management Fischer Sheffey Black (January 11, 1938 – August 30, 1995) was an American economist, best known as one of the authors of the Black–Scholes equation.
Working variously at the University of Chicago, the Massachusetts Institute of Technology, and at Goldman Sachs, Black died two years before the Nobel Memorial Prize in Economic Sciences (which is not given posthumously) was awarded to his collaborator Myron Scholes and former colleague Robert C. Merton for the Black-Scholes model and Merton's application of the model to a continuous-time framework.
He was initially expelled from the PhD program due to his inability to settle on a thesis topic, having switched from physics to mathematics, then to computers and artificial intelligence.
Black joined Arthur D. Little, where he was first exposed to economic and financial consulting and where he met his future collaborator Jack Treynor.
Black began thinking seriously about monetary policy around 1970 and found, at this time, that the big debate in this field was between Keynesians and monetarists.
The Keynesians (under the leadership of Franco Modigliani) believe there is a natural tendency of the credit markets toward instability, toward boom and bust, and they assign to both monetary and fiscal policy roles in damping down this cycle, working toward the goal of smooth sustainable growth.
On the basis of the capital asset pricing model, Black concluded that discretionary monetary policy could not do the good that Keynesians wanted it to do.
If the Federal Reserve withdraws money, the private sector will allow some of its Treasury bills to mature without replacing them.In 1973, Black, along with Myron Scholes, published the paper 'The Pricing of Options and Corporate Liabilities' in The Journal of Political Economy.
Economist Tyler Cowen has argued that Black's work on monetary economics and business cycles can be used to explain the Great Recession.
[7] Fischer Black has published many academic articles, including his best-known book, Business Cycles and Equilibrium.
Black has also received recognition as the co-author of the Black–Derman–Toy interest rate derivatives model, which was developed for in-house use by Goldman Sachs in the 1980s but eventually published.