Published on July 12, 2019.
Using Norihisa Iwata’s book The Economics of Monetary Policy: Examining the “BOJ Theory” as a point of departure, this chapter discusses the errors of the Bank of Japan’s theory and why Haruhiko Kuroda, who understood globally standard monetary policy, was appointed governor of the Bank of Japan.
It points out that while most Ministry of Finance bureaucrats had not studied economics in depth, Prime Minister Abe was well aware that Kuroda had long recognized the importance of correct monetary policy.

July 12, 2019.
In such circumstances, Kuroda was nominated as governor of the Bank of Japan because Prime Minister Abe was well aware that Kuroda, even when he was a Ministry of Finance bureaucrat, had pointed out the importance of correct monetary policy.
This is a chapter I published on May 31, 2018.
The following is a continuation of the previous chapter.
Ministry of Finance Bureaucrats Who Do Not Know Economics.
This is a slight digression, but I have one book at hand.
Its title is The Economics of Monetary Policy: Examining the “BOJ Theory”, published by Nihon Keizai Shimbun, first edition, 1993.
The author was Norihisa Iwata, then a professor at Sophia University.
He was the same Iwata whom the Abe administration later nominated as deputy governor of the Bank of Japan.
In this book, Iwata thoroughly criticized the Bank of Japan theory that “the quantity of money cannot be controlled.”
Before writing this book, Iwata had already been criticizing the errors of the BOJ theory in economic magazines and elsewhere from around 1992.
Then the Bank of Japan, centered on figures such as Kunio Okina, who would later become director of the Institute for Monetary and Economic Studies at the Bank of Japan, launched fierce counterarguments, and a major debate broke out.
For the Bank of Japan, the fundamental theory supporting the correctness of its own policies had been criticized head-on, and it could not possibly leave that alone.
I am not a specialist, but after reading this book, I became convinced that Iwata’s argument was correct.
In the end matter of the book I have at hand, the telephone number of Iwata’s laboratory, which I wrote in pencil, is recorded.
I visited Iwata’s laboratory and directly asked him for instruction.
I vividly remember the atmosphere at the time, but unfortunately, at that time Iwata’s argument was regarded as heretical, while the BOJ theory strutted around in broad daylight.
The errors of the Bank of Japan were finally corrected only after the Abe administration was born and, under Abenomics, Haruhiko Kuroda, formerly of the Ministry of Finance, became governor of the Bank of Japan in 2013.
Although Kuroda had a career in which he had risen as high as vice minister of finance for international affairs, the number-two post in the Ministry of Finance, he was a rare figure who understood not the BOJ theory, but globally standard monetary policy.
To begin with, it is itself rare for a Ministry of Finance bureaucrat to be well versed in economics.
Most of them are graduates of the University of Tokyo Faculty of Law and have not studied economics in earnest.
In such circumstances, Kuroda was nominated as governor of the Bank of Japan because Prime Minister Abe was well aware that Kuroda, even when he was a Ministry of Finance bureaucrat, had pointed out the importance of correct monetary policy.
This article continues.