Yasuo Maeda - Retiring in AY2025

After graduating from the Faculty of Economics at Keio University in 1982, I entered the master's program at the Graduate School of Economics, also at Keio University. At that time, I was studying macroeconomics and econometrics, and it was a period when a new concept called the rational expectations hypothesis was beginning to emerge, particularly in macroeconomics. The macroeconomics taught at Keio University back then was predominantly Keynesian economics, centered on the IS-LM and AD-AS models. Furthermore, in that era, the internet did not exist, and academic journals were the only source of information for learning about trends overseas. While these journals were available in the university library, it was not uncommon for even the latest published papers to have been submitted several years earlier. Therefore, by reading the latest issues of academic journals in Japan, one would inevitably fall several years behind the advancements in economics. When I entered graduate school at Keio University, research incorporating the rational expectations hypothesis into macro models was advancing globally, representing the latest in macroeconomic modeling. However, in Japan, it was difficult to fully grasp these developments, and there were no professors who could teach this new macroeconomics.

That is why I decided to study abroad in the United States. The rational expectations model was developing primarily at the University of Minnesota, as evidenced by the fact that it later came to be known as the "Minnesota School." For this reason, I chose to study at the University of Minnesota. At the University of Minnesota, Tom Sargent, Chris Sims, Edward Prescott, and Neil Wallace—later dubbed the "Four Horsemen"—each taught different macroeconomics courses. My advisor, Professor Wallace, who is still in good health at 85, was in his mid-40s at the time and at the peak of his research career. The other professors were also researchers working at the forefront of the field. At that time, the Department of Economics at the University of Minnesota was a vibrant place, attracting researchers and students from all over the world. Having the opportunity to study economics in such a stimulating environment, receiving direct guidance from professors who would later win the Nobel Prize in Economic Sciences, is a treasure I will cherish for a lifetime.

However, the rational expectations model is a macro model with microfoundations, and as a macro model, it uses a dynamic framework. Furthermore, because it incorporates expectations, it is a stochastic model. This framework is mathematically very difficult, and I remember struggling immensely as this complex model was taught right from the start in the first-year graduate core courses. By the end of the first year, half of the students had dropped out, and the class size was reduced by half. In particular, the very first macroeconomics lecture for first-year students began with advanced topics like infinite-dimensional topological spaces and functional analysis. The building for the Department of Economics was on the west bank of the Mississippi River, and the building for the Department of Mathematics was on the east bank. To attend lectures in the Department of Mathematics, I crossed back and forth between the west and east banks of the Mississippi River multiple times a day. The winters were so harsh that the Mississippi River would freeze over, but those days of crossing the bridge, shivering in the cold, are now a fond memory.

Amidst such rigorous instruction, I was able to complete a dissertation that I was personally satisfied with. After graduation, I worked at the International University of Japan and Osaka University before being able to return to my alma mater, Keio University. At Keio University, I was able to teach students based on the education I received during my graduate school years. Looking back, I realize once again that my experience at the University of Minnesota formed the foundation of my understanding of economics.