Nomunsor Soronzonbold is a junior at DKU studying institutions and governance with a focus on economics, currently living in Ulaanbaatar, Mongolia. The document includes his personal background, insights on macroeconomic concepts, and discusses various topics such as economic growth, rational expectation theory, and decentralized monetary policy. Additionally, he reflects on the importance of macroeconomics and shares experiences from a field trip to Liquity, a decentralized borrowing protocol.

1. Macroeconomics
Final presentation
Nomunsor Soronzonbold

2. Self-Introduction
2
HELLO! 😊 I am Nomunsor Soronzonbold, a junior at DKU majoring
in Institutions and Governance with tracks in Economics. I am Khalkha
Mongolian currently living in Ulaanbaatar, Mongolia. I have been working
for the Office of Development and Alumni Relations for two years. Besides
working, I teach children English voluntarily. I can speak fluent English
and Mongolian and intermediate level Chinese.
I am most interested in decreasing income inequality, advising
governments to make better policies, diminishing corrupt politics and
increasing employment.
I enjoy baking, cooking and growing vegetables at my grandparents
home.
Email:
nomunsor.soronzonbold@dukekunshan.edu.cn
LinkedIn:
https://www.linkedin.com/in/nomunsor-soronzonbol
d-375959175
Wechat: Nomunsor
Phone: +976 88088001

3. Dedication and
Acknowledgements
3

4. “I’d like to dedicate this document to my
siblings and to my future self.
Special thanks to the classmates who
helped me understand the hard concepts
and answered my questions. BIG Thanks
to the professor ZHANG for making the
class super fun and energetic!
44

5. 7-week Lucid Chart
5

6. 6
Week 1-4

7. 7
Week 5-7

8. Table of Content
8

9. Table of Content
9
▰ Macroeconomics Briefing
▰ Addressing Economic Growth: An Interdisciplinary approach
▰ Simulate Rational Expectation Theory: Inflation and Interest Rate
▰ Macroeconomics in Business Practice: Field Trip at Liquity
▰ Future perspective: Decentralized Monetary Policy
▰ Reference
▰ Reflection

10. Macroeconomics Briefing
10
1

11. 11
What is Macroeconomics?
Macroeconomics considers the economy as a whole
and looks at aggregate unemployment, demand and
supply, overall price change, national output etc. It
uses interest rates, taxes, government spending to
stabilize and grow the economy.
So, Japan’s battle against deflation would be a
macroeconomic issue
What it isn’t : It doesn’t look into the behavior of individuals and individual
firm decisions, it’s objective does not involve efficiency which is to
maximize the satisfaction from available resources.
So, a firm deciding to raise it’s price for coffee is not a macroeconomic issue.

12. 12
What are Macrodata?
https://data.worldbank.org/indicator/NY.GDP
.MKTP.KD.ZG?locations=JP
Here we have a summarized data of Japan’s real GDP growth
from 1960-2019. It is one example of an aggregate data
because it takes the base year GDP and the GDP of the year you
want to calculate into account. GDP of 2nd year divided by the
base year. Then we minus 1 from the result for the growth rate.
The GDP is calculated by aggregate microdata with this
formula: private consumption + gross investment + government
investment + government spending + (exports – imports). It
helps us look at the economy as a whole.
For Japan, during the world financial crisis in 2009, they had a
record breaking negative annual growth rate of 5.1 percent.It
indicates there was a contraction in the economy which meant
the GDP of Japan dropped significantly.

13. 13
What is a macromodel?
Labor supply during Covid-19 in
Mongolia in the service industry
Exogenous variable: Covid-19, government intervention
Endogenous variable: Price of movie tickets, restaurants,
flight tickets and the Quantity supplied by movie theatres,
airline companies
Because of the Covid-19 outbreak, our government
decided to close the borders and close movie theatres,
clubs and restaurants before 12. Our travel industry also
declined. Many people who work in the service industry
were forced to give up their jobs. Companies and
organizations had to think about their budget, revenue
and had to ask workers to leave since they couldn’t pay.
This increased unemployment.
The graph also applies to the aviation industry. When
majority of the countries closed their borders the demand
to go abroad decreased and so did the supply. This
resulted to an increase in price for charter flights.

14. 14
Why study Macroeconomics
I think it’s important to study macroeconomics
because it helps governments intervene with
economic issues like unemployment, inflation,
low-income and make policies that reduces the
harm of such issues. For example, inflation and
deflation have different impacts on people. The
rich may make investments on buildings while the
poor hold on to cash. Inflation raises the value of
the building but decreases the value of the cash
they’re holding. With the help of macroeconomics
we can counteract the effects.

15. Addressing Economic Growth:
An Interdisciplinary approach
15
2

16. 16
Why should we care about GDP per capita?
What are its limitations?
It’s important because it’s an easy unit to
compare cross-country economic performance,
average living standard and economic well-being
The limitations are it doesn’t consider income distribution, negative externalities
from consumption and production nor whether the growth is sustainable or not,
excludes non-market transactions, because it’s measured in U.S.D the fluctuating
exchange rate can not truly express the country’s purchasing power.

17. 17
The Convergence of Short-term Economic
Growth
General conclusion of Convergence: Although countries start
at different levels of initial capital and labor they will
eventually arrive at a steady state. But this happens under 3
assumptions of diminishing marginal product of labor, capital,
and constant returns to scale.
When we change the initial labor nor
capital it doesn’t impact our steady
state!
When
L0=400
K0=300
When
L0=500
K0=300
When
L0=400
K0=500

18. 18
The Steady State Per Capita GDP
The first graph shows the
original rate :)
When the saving rate goes
up it leads to a higher steady
state per capita capital and
income.
s= 0.5 then k* is 5.94
y*=24.39
s= 0.9 then k* is 18.54
y*=43.06

19. 19
The Steady State Per Capita GDP
When the population rate goes
down it leads to a higher steady
state per capita capital and
income.
Originally
n=2 then k*=5.945
y*= 24.39
Then we lower the population rate
to
n=0.5 then k*=82.64
y*=90.9

20. 20
The Steady State Per Capita GDP
When the depreciation rate goes
down it leads to a higher steady
state per capita capital and income.
Originally
delta=0.1 then k*=5.945
y*= 24.39
Then we lower the depreciation rate
to
delta=0.03 then k*=6.15
y*=24.81

21. 21
The Drive for Long-term Economic Growth
t=9.5
When a=0 y* is 24.39
a=3
y* is 58157921580431.2
When the technology increases
gdp per capita increases, the gdp
exponentially grows as
technology increases overtime.

22. 22
What Inspires me on Economic Growth, how do I view the
world differently?
The most interesting information I got out from the lecture was how much population
growth decline impacts the economic performance of countries. I used to think the
population growth mattered a lot in developing economy because the more people you
have the more you can produce and consume. But on the macro level and real-world it
doesn’t work like that.
Mongolia had a miracle gdp growth rate of 11.7% in 2013 due to the mining industry. More
than 60% of our exports are raw coal majority of our coal to China. Even amid Covid-19 our
exports to China grew from 1800 trucks to 2000 in a day.
Source: https://www.montsame.mn/en/read/234748
My Github link: https://github.com/Nomunsor/DKU_Econ204

23. Simulate Rational Expectation
Theory: Inflation and Interest
Rate
23
3

24. Executive Summary for general results
and Rational Expectation Theory
-Starting with rational expectation theory it assumes that agents “know the model” and therefore ensures internal
consistency.
In the monetary market, the equilibrium stands where money demanded is equal to money supplied. The central bank
provides the money supply so it is fixed.
When the interest rate changes ceteris paribus, the price level changes by the same rate.
When the monetary supply changes it causes a shift on the vertical graph, and Price level changes by the same rate.
When there is a technological improvement (Alipay, wechat money) it reduces the demand for fiat money which results
in equilibrium price level increase.
When there is an increase in real GDP, price level decreases.
When there’s a recession or a boom the government would want to control the price level therefore increasing or
decreasing money supply. So, a decrease in GDP will have to decrease money supply.
24

25. Equilibrium of Monetary Market
In the monetary market the the equilibrium will be at where Money demanded intersects
Money Supplied. The Money supplied is fixed since the central bank decides how much
money they will supply, it is drawn vertically on the graph.
25
P=5 Originally : i=0.05
then I changed the i=0.17 and
P=17

26. A Change in Monetary Supply
In class we learned the money supply
change shifts and changes the price level.
If M is increased by a certain rate Price
level will also increase by that rate.
26

27. A Change in Monetary Demand
When the technology improves
monetary demand(fiat money) will
decrease. When M^d decreases the
equilibrium price level increases.
27
Then we changed m2 =0.8
to m2=0.3
and P2 changed from 6.25
to 16.67

28. A Change in Monetary Demand from Real GDP
In class we discussed that real GDP and
the real demand of money are positively
correlated. So when there is an increase in
GDP, price level will decreases.
28
We decrease the Y2=20 to Y2=5 and the
price level changes from P2=2.5 to
P2=10

29. Inflation and Real Interest Rate
When we increase the inflation rate the real money
decreases in value. When we decrease the inflation rate
the real money increases in value
29
We change the original
inflation rate of 0.06 to
0.11
It results in a decrease
of r and the money lost
its value much higher

30. Price Level Targeting and Endogenous Money
When there is a GDP
decrease the money supply
will decrease so that P stays
at the same level
30

31. Government Revenue from Printing More Money
The rate of money growth changed
from 2% to 0.15% which meant the
government now consumes the
nation’s 2.9% of the real GDP.
The revenue also significantly
decreased.
31
Governments are incentivized to print more money and allocate it so they can use service. But
when they are not managed well the growth in GDP can be seen as a money illusion. People
have more money but products can become more expensive.
https://colab.research.google.com/drive/1lwUI
OWR7i3hqOUDCFf-oljTYHzOrc3he?usp=sharing

32. Limitations of Rational Expectation Theory
32
When evidence of reality contradicts? When intuition contradicts?
In the model it assumes that agents within the model know about past experience and information but in reality
not everyone knows about the variables in the model. It is impossible. Also the models based on rational
expectations do not take into consideration capital, taxation, inventory and wealth effects. It also assumes there
is a continuous market clearing mechanism and that all markets clear instantaneously which isn’t true. In the
monetary market it takes time for the government to change the monetary supply when Md=Ms. They don’t reach
equilibrium instantly .
Is Money indeed neutral?
Yes. It is neutral because the change in the stock of money only impacts nominal variables, it
has no real effect(employment, real GDP, real consumption) on economic equilibrium

33. Macroeconomics in Business
Practice: Field Trip at Liquity
33
4

34. Dr. Robert Lauko found Liquity, a decentralized
borrowing protocol with distinctive features of 0
interest-rate loan, low collateral ratio,
censorship resistant, with directly redeemable
coins, and growth incentives. He quit his former
job to solely focus on this project and they were
able to successfully gather teammates to
further develop the project and received 2.4
million dollars in investment.
About Liquity
34

35. What is a stablecoin? Why is
Liquity one?
35
Stablecoin is a cryptocurrency that
attempts to offer price stability and are
backed by a reserve asset.
Liquity is one of the crypto-debt backed
stablecoin. They use LUSD a USD-pegged
stablecoin. The reserve asset is Ethereum.
When margin borrowers provide volatile token
Ethereum into the system they can borrow
LUSD . https://docsend.com/view/cys4cj2z5n
kf4mce

36. Stablecon and Macroeconomics
36
Differs:
Stablecoin provides privacy. The extensive
use of stablecoin as a payment method could
impact the exchange rate channel of monetary
policy. It will be harder to control domestic
developments.
The Money supplied is different. In
Macroeconomics the central bank determines
the supply of money but in stablecoin users
determine the supply.
Relates:
The cryptocurrency has to peg their currency
to achieve stabilization.
When stablecoins become a medium of
exchange internationally, the return on a SC
may affect the amount of domestic currency
deposits and thus deposit and loan interest
rates in the domestic currency financial
system, further diluting the effectiveness of
the interest rate channel of monetary policy.
Similar to Dollarization

37. Business model of Liquity
37
Liquity will have a capped supply of
LQTY tokens. They will have 66.6% of
them for sale to investors, partners and
team members. The other 33.3% will be
automated issuance that makes users
participate more so they are front ends
and stability depositors.
https://docsend.com/view/cys4cj2z5nkf
4mce

38. Business model of Liquity
38
People who have LQTY can stake it in the contract and earn
redemption, issuance fee . The system airdrops LQTY, a portion
from the LQTY that was airdropped would be given to stability
providers and the front end. This incentivizes them to market
Liquity and help it grow attracting more users.
Liquity is only in charge of the smart contracts, the protocol of the
system. It does not meddle with the front ends. The system will give
out LQTY tokens to the front ends. The system measure amount
stability depositors made through a specific front end. Based on the
turnover it will proportionally define which fraction of the 33.3% total
airdrop should go to which front end. The people on the front end
would also get rewarded based on proportional share.
https://docsend.com/view/cys4cj2z5nkf
4mce

39. Business model of Liquity
39
Liquity satisfies users’ needs by offering automatic
issuance, interest free liquidity, low collateral ratio
compared to other stablecoin lender, they are directly
redeemable at face value! The price stability does not
rely on human governance and it isn’t controlled by
anyone so the protocol will stay the same.
The usage of Liquity will enable people to get more rich and
increase economic activity.
Because it’s decentralized it can be used for trades across
borders without paying transfer fees as large as the commercial
banks charge. It saves time as well.

40. Reflection
40
Personal reflection:
It was wonderful to see someone being
successful with their start-up in real life. I
am risk averse so, if I had a stable job then I
wouldn’t drop it to pursue my own idea. It
encourages me to be open to new ideas and
seize the opportunity and look at where he
is! :)
Also, the importance of Integrated skills
such as data science and economic
modelling can definitely benefit me in the
future!
On Macroeconomics:
There needs to be more efficient liquidation systems so we
don’t waste time.
The usage of stablecoins as a medium of exchange and the
store of value makes it harder to implement effective
monetary policies. So, how can we integrate them and make
the monetary policy effective as well?

41. Decentralized Monetary
Policy
41
6

42. Conventional Monetary Policy
3 types of Monetary Policy
42
Before the 2009 world Financial crisis, the central banks focused on adjusting the interest
rate as a tool through OMO, increasing money supply. When we have high unemployment
rates, the central bank can lower the interest rate for better money flow, stimulating the
economy which decreases unemployment but increases inflation. When the market is
inefficient the central bank can intervene with conventional monetary policy to stimulate the
economy.

43. 3 types of Monetary Policy
Unconventional Monetary Policy
43
After the 2009 world Financial crisis, the interest rates were really low. Conventional monetary policy
were no longer effective so they had to come with new ways to improve the economy. Through
quantitative easing(buying more government bonds) and negative interest rate they were able to
increase money supply. The challenges is has is the liquidity trap. When the interest rate is near 0
printing more money is not effective because there will be an exchange of money for money. In the
Long Run Q.E will result in inflation and wealth inequality. The Central Bank may also lack
independence as governments pressure them into increasing the money supply.

44. Decentralized Monetary Policy
3 types of Monetary Policy
44
Traditional monetary policies, banking and services are seen as slower and inconvenient. Centralized
ledger has an issue with transparency and security. Only one house recalls every transaction and if it
is hacked then many people will lose their assets. Distributed ledger solves the issues by having more
than half the miners back up the transaction copy, it’ll be impossible to hack and change the
transaction. The transactions are public and traceable. De-fi products like ethereum and bitcoin work
24/7, there is no need for middleman, you control your own assets, it’s transparent, and open source.
The biggest advantage of blockchain and cryptocurrencies are that the supply of the coin doesn’t
matter in determining the value of it. It is more about the function for example, bitcoin functions as a
store of value and medium of exchange. But, it is not widely accessible nor user friendly, if there are
bugs on the cryptocurrency then it becomes easier for hackers to take your assets.

45. Dynamics of how new monetary products are created to
satisfy people's unsatisfied needs
45
CentralizedMonetary
Policy
Conventional Monetary
Policy
Unconventional Monetary
Policy
Before financial crisis, used
OMO and adjusted interest rate
Satisfied needs to stimulate
the economy, increase
money supply and decrease
interest rate
After the financial crisis, central banks
used quantitative easing and negative
interest rate to stimulate the economy.
Satisfied the need to stimulate the
economy when the interest rate hit the
zero-lower bound and was still
underperforming.

46. Dynamics of how new monetary products are created to
satisfy people's unsatisfied needs
46
Decentralized Monetary
Policy
Blockchain and smart
contract Decentralized Finance
Depending on the company or the
cryptocurrency they come up with
their own monetary protocol. Liquity
for example, had their own protocol.
Ethereum and bitcoin had rigid,
predefined monetary policy. Bitcoin
had a fixed supply.
It brings transparency,
automation, openness
by cutting of middleman
and using the
decentralized operation
system
Smart contracts leave out
the middleman so it’s
efficient and much faster.
There won’t be problems in
execution
Blockchain saves our transaction
information on may other computers
so we don’t have to worry about losing
the transaction
Monetary Policy on the
Blockchain

47. New Research Idea
47
Challenge: Decentralized monetary products are environmentally unfriendly due to their extensive usage of electricity.
The popularity of digital currencies further accelerates global warming, endangering our lives and conflicts with our
global goal of decreasing carbon emissions.
Reference:
https://www.extremetech.com/extreme/184427-one-bitcoin-group-now-controls-51-of-total-mining-power-threatening-entire-cur
rencys-safety
Scientists estimate that annual carbon emissions range from
22.0 to 22.9 MtCO2. This means that the emissions produced
by Bitcoin sit between the levels produced by the nations of
Jordan and Sri Lanka.
https://doi.org/10.1016/j.joule.2019.05.012
So, the research I want to conduct is how countries can
decrease the carbon emissions of bitcoin mining without
impacting its growth in the country and how countries can
motivate bitcoin mining companies to create green energy
resources and use it to sustain itself.

48. New Research Idea
Some of the questions to ask is:
1. If we were to impose a government tax what are the type of drawbacks it can have on the
growth and consumer usage?
2. Is it possible to regulate bitcoin mines internationally? It will become a significant problem
in the future.
3. What policy tools can we use to make sure bitcoin mining companies reduce their carbon
emission and are motivated to have a cleaner energy source?
4. What are the green energy alternatives?
Methods to use: Local experiments
For example, a small country comes up with their own digital currency. They impose an
environmental tax on the mining companies. The users also pay transaction fees that have added
environmental tax fees. How does this impact user preference on using domestic digital currency?

49. New Research Idea
Possible results of the research method could be
that users are unlikely to use local digital currency
if there are other universal digital currencies with
less transaction fee. If governments impose an
environmental tax on mining companies then
they’ll be less likely to have the digital currency
growth they want. With the research the next
person will be more likely to find which policy tools
may be more effective.
49

50. References
Special thanks to all the people who made and released these awesome resources
for free:
▰ Github URL: https://github.com/Nomunsor/DKU_Econ204
▰ World Bank GDP data:
▰ Liquity Business model: https://docsend.com/view/cys4cj2z5nkf4mce
▰ Mongolian coal export: https://www.montsame.mn/en/read/234748
▰ Bitcoin mining picture:
https://www.extremetech.com/extreme/184427-one-bitcoin-group-now-control
s-51-of-total-mining-power-threatening-entire-currencys-safety
▰ Electricity consumption of Bitcoin study:
https://www.cell.com/joule/fulltext/S2542-4351(19)30255-7
50

51. Reflection
I am very grateful to have improved my skills on understanding graphs and effective
communication. During group discussion I actively listened and participated in the
discussions. I learned to use github, manipulate graphs and understand them. There were
many new knowledge on how economists conduct research and the importance of
recording our process when working on a project.
For Macroeconomics, I learned that we are in a new generation of algorithmic,
decentralized economic products and systems. It cannot replace previous generation
monetary policies but will improve on it.
51

52. 52
THANKS!
Any questions?
You can find me at
nomunsor@gmail.com