Kazusuke Tsujimura - Retiring in AY2018

I was hired as a research associate in the Faculty of Economics at Keio University in 1979. Shortly after I was hired, I happened to meet Professor Ichiro Okuma, who was the dean of the Faculty of Economics at the time, at the entrance of the research building, and he spoke to me for the first time. He said, "Let's go to the dean's office," so I naturally assumed we were going to the office of the dean of the Faculty of Economics. However, Professor Okuma knocked on the door of the dean of the Faculty of Business and Commerce, where Professor Saburo Kojima was the dean. In fact, I had graduated from Keio's Faculty of Business and Commerce, and this was the first time I was hired as a faculty member in the Faculty of Economics. At that time, the Faculty of Business and Commerce was characterized by its education in a wide range of fields, and I myself took a variety of courses, including not only economics-related subjects but also business administration, accounting, and even civil and commercial law. Both deans, Okuma and Kojima, advised me to conduct research that leverages this breadth, without being confined to the narrow field of economics. When I told this to Professor Keiichiro Obi and Professor Iwao Ozaki, who had been mentoring me, they suggested that I research flow of funds analysis, which was attracting attention at the time. The pioneers in this field at Keio were Professor Fumimasa Hamada of the Faculty of Economics and Professor Tetsuo Ihara of the Faculty of Business and Commerce, and the research of both professors was of an extremely high standard, even globally.

After this, from 1983 to 1985, I had the opportunity to study abroad at the University of Oxford with support from Keio's Fukuzawa Fund. Just before my departure, I went to pay my respects to Professor Takuma Terao, who was a Professor Emeritus. Based on his own experience studying in Germany and France, he told me, "While it is of course important to study academics, the true purpose of studying abroad is to learn about the cultural and social background that gave rise to that scholarship." This prompted me to rethink my study abroad plans from scratch. Fortunately, Professor Michio Morishima, who was a professor at the LSE at the time, introduced me to Professor Andrew Graham, a principal author of the Wilson Report, and I decided to study the British financial system. Professor Graham taught me a wide range of topics, including Keynes's monetary theory and the theories of the Scandinavian school. Not only that, but he also advised me that "the foundation of finance is claims and obligations, and to truly understand this, you need to study Roman law." It was also a great gain to have the opportunity to audit Professor Barry Nicholas's Roman law classes for two years. However, this advanced knowledge could not be acquired overnight, and it was not until 1998 that I was finally able to publish the results of my studies abroad as "Asset Prices and Economic Policy" (Toyo Keizai Inc.).

Around this time, Professor Hiroyasu Iida, who was the dean of the Faculty of Economics, advised me to develop flow of funds statistics and analytical methods using funds from the academic and educational database of the Ministry of Education (at the time). Fortunately, this application was accepted in 1999, and with the cooperation of Toyo Keizai Inc., I was able to launch the Flow of Funds Analysis Project at the Keio Economic Observatory (KEO) at Keio University. Initially, I was working on disaggregating the flow of funds statistics from 1954 to 1999 created by the Bank of Japan into multiple sectors. However, when the Bank of Japan introduced its quantitative easing policy in 2001, ahead of the rest of the world, I began research in parallel to apply flow of funds statistics to this field. This research was published in the journal *Economic Systems Research* in 2003 as the first paper to theoretically and quantitatively analyze quantitative easing policy, and I was also given the opportunity to present it in seven countries in Europe and the United States. This analysis, which used the flow of funds statistics published by the Bank of Japan, was highly praised for its ability to analyze the effects of each target of open market operations, but it was also pointed out that it was insufficient in that its scope of analysis was limited to financial markets. An improved version that also allows for the analysis of the impact on the real economy is "A Flow of Funds Analysis of the U.S. Quantitative Easing," published in the same *ESR* journal in 2018. As the name "flow of funds analysis" suggests, it depicts the exchange of funds between institutional sectors such as households, corporations, and the government. This paper is, of course, the result of more than a decade of research, but in writing it, I drew heavily on my teaching experience at Keio, including not only the "Flow of Funds Analysis" course I taught for many years, but also the "Finance" course I taught at the Law School in my later years. Before the shift to quantitative easing policy, I often talked about daily fund supply and demand and financial market adjustments in my "Flow of Funds Analysis" class. Furthermore, regarding *creditum*, the loan contract for funds in a pure credit economy dating back to ancient Rome, the results of discussions with students in the "Finance" course are fully demonstrated. It seems no coincidence that this paper was published in my final year at Keio. I would like to offer my retirement remarks with heartfelt gratitude to the professors who gave me invaluable advice and to the students who were excellent discussion partners.

(Interview conducted in December 2018)