2. 前沿性
时代性
引领性
Jialin Li (Cammie) is a sophomore student at Duke
Kunshan University, majoring in Political Economy
with Economics track. She is from Shandong
province, China. She is passionate about economics-
related topics and to explore more subjects about
social science. She also shows great interest in public
policy and management, in which filed she has intern
experience. Apart from that, she also dedicated
herself to education. She taught English in several
different institutions, such as EF education, and now
is working on the YLGCH Health Education
Program. She is interested in music and musical. She
is now the DKU Guitar Club president and a core
member at the DKU Musical Club.
Linkedin:
https://www.linkedin.com/in/佳琳-李-a31a011b8/
Self-Introduction
3. Dedication and Acknowledgment
The completion of this
undertaking could not have
been possible without the
participation and mentor of
Prof Zhang for kindly
guiding me during the past
seven week.
To my friend Vicky Jiang,
Alina, and Jiayi Li for
always supporting me
Special thanks to my love
Anqi for always be there for
me when needed.
Thanks are also due to
Arthur, Carrie and Eric
for you are the greatest
teammate.
5. Macroeconomics Briefings
Addressing Economic Growth:
An Interdisciplinary Approach
Simulate Rational Expectation
Theory: Inflation and Interest
Rate
Macroeconomics in Business
Practice: a field trip to Liquity
Future Perspective:
Decentralized Monetary Policy
Reference&Epilogue
Content
7. What is macroeconomics?
M a c r o e c o n o m i s t s t u d i e s t h e o v e r a l l , w h o l e , a n d a g g r e g a t e
p e r f o r m a n c e , s t r u c t u r e o f t h e e c o n o m y .
Macroeconomiststudiesemployment,inflation,aggregate
demandandsupply,andgovernmentalintervention.
Macroeconomistdoesnotstudyindividualeconomicchoices,
whetherisapersonorafirmalone.
8. Whataremacrodata?
The GNI per capita is the dollar value of a country's final
income in a year, divided by its population.
In the 1980s, HK has higher GNI per capita than mainland
China. We can witness a stable increase from approximately
300 dollars in the 1980s to 2019, 10,410 dollars for mainland
China. It is because of the economic reform and opening-up
policy beginning from 1978. The GNI per capita in HK
increases much faster; however, encounter drops in
1998,2000-2002, and 2008 due to economic recession and
depression. One of the reasons that GNI per capita in HK is
greater than mainland China is that HK has a smaller
population than mainland China.
We can anticipate that China's GNI per capita will constantly
increase shortly, though during the COVID-19 pandemic this
conjecture is of less reliability.
GNI PER CAPITA, CHINA AND HK
Figure: GNI per capita in China, derived
from:https://data.worldbank.org/indicator/NY.GNP.PCAP.CD?
end=2019locations=CNstart=1962view=chart
10. Why study macroeconomics?
R E B R A N D I N G S T R A T E G Y
演讲是⼀种交 ⼯具演讲
是⼀种交 ⼯具
1. Help me understand the
world in which I live
2. Help me become a
more astute participant in
economy
3. Help me better
understand economical
policies and governmental
intervention(citizenship)
4. Identify business cycle:
seize opportunities and
avoid loss
5. For my future career
Point 1 and Point 2
derived from interview of
Economist Gregory
Mankiw.
11. P R O B L E
M S E T 2
A d d r e s s i n g
E c o n o m i c G r o w t h :
A n
I n t e r d i s c i p l i n a r y
A p p r o a c h
ECON204
12. B e c a u s e o f p o p u l a t i o n
g r o w t h , t h e i n c r e a s e i n G D P
p e r c a p i t a i s l e s s t h a n
s t a n d a r d r e a l G D P .
T h e r e f o r e , a l t h o u g h r e a l G D P
i n c r e a s e d , a v e r a g e i n c o m e s
d i d n ’ t .
C a s e : U K
I t g i v e s a r o u g h i n d i c a t i o n o f
a v e r a g e l i v i n g s t a n d a r d s ,
w h i c h r e f e r s t o t h e q u a n t i t y
a n d q u a l i t y o f t h e
g o o d s a n d s e r v i c e s
c o n s u m e d .
S t a n d a r d o f L i v i n g
G D P p e r c a p i t a s h o w s h o w
m u c h e c o n o m i c p r o d u c t i o n
v a l u e c a n b e a t t r i b u t e d t o e a c h
i n d i v i d u a l . I t c a n b e u s e d t o
a n a l y z e t h e p r o s p e r i t y o f a
c o u n t r y b a s e d o n i t s e c o n o m i c
g r o w t h
E c o n o m i c G r o w t h
GDP PER
CAPITA
13. L I M I T A T I O N O F G D P P E R C A P I T A
L i f e s a t i s f a c t i o n : t h e i r g e n e r a l w e l f a r e , o r
h a p p i n e s s , l i f e e x p e c t a n c y , l e i s u r e t i m e ,
s o c i a l j u s t i c e a n d p o l i t i c a l
e m p o w e r m e n t . . .
D i f f e r e n t c o u n t r i e s h a v e d i f f e r e n t p r i c e
l e v e l s , c i t i z e n s w i t h t h e s a m e s a l a r i e s
m a y e n j o y d i f f e r e n t g o o d s .
G D P P E R C A P I T A i g n o r e s i n c o m e
d i s t r i b u t i o n a n d e c o n o m i c e q u a l i t y .
I t h a s t h e s a m e l i m i t a t i o n s a s G D P : i t
d o e s n o t c o v e r n o n - m a r k e t t r a n s a c t i o n s .
s u c h a s h o u s e h o l d p r o d u c t i o n
I t d o e s n o t i n c l u d e n e g a t i v e e x t e r n a l i t y ,
s u c h a s p o l l u t i o n , h e a l t h .
14. Variable: Initial labor level: L(0)
L(0) in graph1 is 100, L(0)=10 in graph2.
Results: K*, both graphs and the Steady Stage
stay the same. Economy in graph2 with lower
initial labor converge faster.
T h e C o n v e r g e n c e o f S h o r t -
T e r m E c o n o m i c G r o w t h
The initial variables should not
matter, economy that starts with
poverty will catch-up.
C o n c l u s i o n
15. L e a d s t o h i g h e r s t e a d y s t a t e p e r
c a p i t a c a p i t a l a n d i n c o m e
Conclusion
V a r i a b l e : p o p u l a t i o n g r o w t h ()
c h a n g e s f r o m 2 t o 0 . 8 .
R e s u l t s : k * r i s e s f r o m 5 . 9 4 t o 3 4 . 6 0 ,
y r i s e s f r o m 2 4 . 3 9 t o 5 8 . 8 2 , l e a d i n g
t o h i g h e r s t e a d y s t a t e .
T h e S t e a d y S t a t e P e r
C a p i t a l G D P
T H E S T E A D Y S T A T E
16. V a r i a b l e : T e c h n o l o g y l e v e l a
r i s e s f r o m 1 t o 4 . 8
R e s u l t s : S t e a d y s t a t e G D P p e r
c a p i t a y w i t h h i g h e r t e c h n o l o g y
l e v e l g r o w t h r a t e a i n c r e a s e s .
Technology matters
T H E D R I V E F O R L O N G -
T E R M E C O N O M I C G R O W T H
17. H O W T H I S M A C R O L E C T U R E
I N S P I R E S Y O U A B O U T E C O N O M I C
G R O W T H ? H O W D O Y O U V I E W T H E
W O R L D D I F F E R E N T L Y ?
E f f i c i e n c y a n d e q u a l i t y - - - E c o n o m i c
g r o w t h d o e s n o t m e a n a n i n c r e a s e i n
a v e r a g e l i v i n g s t a n d a r d s a n d s o c i a l
w e l f a r e .
T e c h n o l o g y m a t t e r s f o r e c o n o m i c
g r o w t h .
H o w d i f f e r e n t f a c t o r s a f f e c t
e c o n o m i c d e v e l o p m e n t r e s p e c t i v e l y
a n d h o w s u c h a n e f f e c t t a k e s p l a c e
I l e a r n e d t o v i e w e c o n o m i c g r o w t h
f r o m b o t h t h e s h o r t t e r m a n d l o n g
t e r m .
I t d o e s m a t t e r i f a c o u n t r y i s p o o r
f o r n o w , i t w i l l c a t c h u p e v e n t u a l l y
u n d e r s o m e c o n d i t i o n s .
18. Problem set three
S i m u l a t e R a t i o n a l E x p e c t a t i o n
T h e o r y : I n f l a t i o n a n d I n t e r e s t R a t e
ECON204
20. Executive Summary for
General Results of the
Rational Expectation
Theory you Learned
Decrease in Ms would reduce
the price level P
Technological improvement
for making financial
transactions would decrease
the price level P.
The real GDP increases, the
price level would decrease.
When targeting a price level,
the money supply is
procyclical.
21. T a s k 1 : S i m u l a t e t h e E q u i l i b r i u m o f M o n e ta r y M a r k e t
Md/P=m(Y/i), m=1
Ms = Md
Exogenous variable: Ms, m, Y, I
Endogenous variable: Md, P.
A decrease in
money supply from
1000 to 500 will
decrease the price
level from 5 to 2.5.
22. Task 2.1: Simulate A
Change in Monetary
Supply
When decreases Ms from
1000 to 850, the price level P
decreases from 5 to 4.25.
23. Task 2.2: Simulate A
Change in Monetary
Demand
When technology for
making financial transactions
improves, for example m
increases from 1 to 2.4, the
equilibrium price level P
decreases from 5 to 2.08
24. We can see that the Price
level is counter-cyclical, when
the real GDP increases from
10 to 18, the price level
decreases from 5 to 2.7 .
Task 2.3: Simulate A Change
in Monetary Demand from
Real GDP
25. We can see that when
targeting a price level of 5, the
monetary supply is procyclical,
when real GDP decreases form
10 to 3, monetary supply must
decrease from 1000 to 2000
T a s k 2 . 4 P r i c e T a r g e t i n g a n d E n d e g e n o u s M o n e ta r y S u p p ly
26. Task 3: Simulate Inflation
and Real Interest Rate
Exogenous variable: P1, π, DA1, i1
Endogenous variable: P2= P1(1+ π) RA1= DA1 /P1
DA2= DA1(1+ i1) RA2 =DA2/P2 r1 +1=DA2/DA1
Conclusion
We can see that the real interest rate (-0.044) almost
equal the nominal interest rate (0.048) minus the inflation
rate (0.078). Moreover, when the inflation rate is higher
than the real interest rate, the real assets decrease from
20 to 19.109 even when the nominal interest rate is
positive.
2 0 . 0 1 9 . 1 0 9 4 6 1 9 6 6 6 0 4 8 2 2 - 0 . 0 4 4 5 2 6 9 0 1 6 6 9 7 5 8 9 2 - 0 . 0 4 8
27. M2= M1(1+ µ1)
P2=M2*i/(m*Y)
(M2 – M1) /P2=Real Revenue
Government can generate real
revenue by printing money. We
can see that we government print
5% more money, the government
revenue is 9.523, which is 95.23%
of the real GDP.
Task 4 Simulate Government
Revenue by Printing More
Money
28. Limitations of the Rational Expectation
Theory
Individuals are not rational enough and do not know
economic models to make economic decisions.
People can not always learn from past failures
People may only focus on short-term interest.
The theory was developed in the 1990s with a low
inflationary environment, and may not fit in today's
economy.
29. Problem Set 4
JIALIN LI, DEC.2020
M a c r o e c o n o m i c s i n B u s i n e s s P r a c t i c e : a
f i e l d t r i p t o L i q u i t y
30. How to achieve a zero interest rate in business practice?l How do you
change your profession from lay to blockchain/cryptocurrency?
How do you think your previous experience affected your future
career, especially when establishing liquity?
How to achieve price stability in Liquity through borrowing protocol?
And how redemption works in the protocol?
Do the cryptocurrency business market gets affected by the COVID-
19 pandemic?
How Liquidity adjust itself facing such influence? Since the stablecoin
issued is pegged to the USD and requires free capital movements, it
gives up an independent monetary policy. What do you think of the
criticism that it is thus centralized? There is a rumor that fiat-
stablecoin, such as the USDT, did not abandon its independent
monetary policy and secretly overshot its dollar reserves?
Q U E S T I O N S
I n t e r v i e w Q u e s t i o n s f o r
L i q u i d i t y ' s C E O R o b e r t
32. Liquity offers interest-free loans by issuing its own USD-pegged
stablecoin LUSD against ETH used as collateral. The loans only need to
maintain a minimum collateralization ratio 110%. Liquity replaces the
need for interests and human intervention by algorithmically adjusted
redemption and loan issuance fees to support its currency. Both fees are
initially set to 0% and increase with the redeemed amounts, while tending
to return to zero in times of low redemption activity.
Robert Lauko is Founder CEO at Liquity, building a decentralized
protocol to revolutionize collateralized borrowing. Formerly, Research
Associate at DFINITY, worked on consensus algorithms, fair incentive
schemes, network monitoring and scalability issues among other things.
Holding a Ph.D. in Law from the University of Zurich, Robert served as a
law clerk at the Swiss Federal Administrative Court and in various other
legal roles. After working on many layers of their Internet Computer
project, including consensus algorithms and incentive mechanism design,
Robert decided to revolutionize decentralized borrowing and founded
Liquity.
Liquity Fieldtrip
Summary
33. FIELDTRIP CONTETN
Introduction to Stablecoins
Efficient Liquidation Mechanism
Price Stability
Business Model
The establishment of Liquity
QA
34. S t a b l e c o i n L U S D
Short-term volatility makes bitcoin and other popular
cryptocurrencies unsuitable for everyday use. A crypto coin
should maintain its purchasing power and should have the
lowest possible inflation, sufficient enough to encourage
spending the tokens instead of saving them. Stablecoins
provide a solution to achieve this ideal behavior.
Stablecoins can be classified into Fiat-backed,
Cryptocurrency-backed, Crypto-debt-backed, and algorithmic
one.
LUSD is a Crypto-debt-backed stablecoin that pegged to USD
against ETH used as collateral, and it is fully redeemable at
face value for the underlying collateral. The value of LUSD in
the system is fixed at $1. When 1 LUSD trades below $1,
holders and arbitrageurs are incentivized to redeem 1 LUSD
for $1 worth of ETH. This helps to stabilize the price of LUSD
through direct arbitrage.
35. Stablecoins and monetary policies
Monetary policy: Central
banks control over interest
rate and monetary supply to
ensure price stability.
Fiat-stablecoins: pegged to banking
currency, and the amount of the
currency used for backing of the
stablecoin has to reflect the
circulating supply of the stablecoin.
Stablecoins response to supply-
demand law.
During periods of strains, there will
be a massive substitution of fiat
currencies into stable coins.
Relation:
Stablecoins are cryptocurrency.
Issuing of stablecoins does not
require monetary authorities.
(decentralized)
Stablecoins would not be influenced
by inflation/deflation.
Stablecoins are redeemable.
Differences:
36. 北京市东城区 | 2020
THE
BUSINESS
MODEL
Highly capital-efficient through instant liquidation
The Stability Pool is used to instantly absorb troves with
insufficient collateral. It is maintained by users who deposit
LUSD in exchange for the future collateral of liquidated
troves. When a trove falls below the minimum collateral
ratio of 110%, the system liquidates its debt by burning an
identical amount of LUSD tokens held in a Stability Pool. In
return for the LUSD that is burned from the Stability Pool,
all the collateral of each liquidated trove is sent to the
Stability Pool and distributed proportionally among all
depositors. If the amount of LUSD in the Stability Pool goes
to zero, the system moves to the second phase of the
liquidation process in which it redistributes the remaining
defaulted troves to all existing troves, in proportion to their
collateral ratio. By redistributing the riskiest positions to the
safest and adjusting the incentive structure in times of low
collateralization, Liquity quickly stabilizes itself via direct
feedback loops. Source:https://medium.com/liquity/liquity-
decentralized-borrowing-5a4b0eb28efc
37. 北京市东城区 | 2020
THE
BUSINESS
MODEL
Price stability through redemption
When redeemed, the system uses the received LUSD to repay
the riskiest trove(s) with the lowest collateral ratios and
transfers the respective amount of ETH to the redeemer. This
also creates an incentive to make sure that troves are
sufficiently collateralized relative to all other troves,
improving overall system security.
Issuance of LQTY Tokens
Front ends will continuously receive LQTY tokens based on
the amount of LUSD deposited through them and compete
for users via the kickback rate that they can freely set
between 0% and 100%.
Source:https://medium.com/liquity/liquity-
decentralized-borrowing-5a4b0eb28efc
38. REFLECTION
I learned a decentralized and crypto side of
macroeconomics that currency and
transaction could happen with smart
contracts and algorithm.
Less human intervention in macroeconomics.
However, it also follows the supply-demand
law, and when supply meets demand, there
will be price level stability.
I develop a brand new understanding of
assets management. (collateral,
redemption...)
H o w t o m a k e i n v e s t m e n t i n c r y p t o c u r r e n c y
I d e v e l o p i n t e r e s t i n b l o c k c h a i n a n d w i l l l e a r n
m o r e a b o u t i t l a t e r
T h e p r o f e s s i o n s t o r y o f R o b e r t e n c o u r a g e s m e
t o p u r s u e a c a r e e r p a t h o f m y o w n a n d t o n o t
a f r a i d o f t a k i n g r i s k s .
M y p e r s o n a l t a k e a w a y :
40. Research question: How can decentralized technology fit into regulatory
definitions and structures? --to satisfy needs for increasing security
Planned Methodology: data collection and data analysis. Combine
research methodology of public policy and policy analysis is a must.
Possible Results: (potential regulations)
Potential Intellectual Merits:
Limitation: 1. Impair decentralization
1.Market integrity and efficiency and investor protection
2. Consumer protection: privacy protection, information
sharing and safeguards against cyber risks.
3. Limits or standards to activities undertaken, collect data to monitor
the growth of new market activity and its linkages to the financial system
4. Limiting illicit activities
Discover cryptocurrency market response to regulatory policies and
optimal regulatory policies. Broad Defi application field. Increase the
security of Defi. Crime reduction...
2. Undermine possible technological improvement of Defi,
3. Block its linkage to the financial system (eg. China
banned cryptocurrency use.)
part 5
Future
Perspective:
Decentralized
Monetary Policy
41. GITHUB:
https://github.com/Cammie-
Russell/DKU_Econ204
10 Best Skills to Include on a Resume
(With Examples) | Indeed.com
Field Trip ‒ Macroeconomics Fall 2020
Course Site (duke.edu)
https://www.oliverwyman.com/our-
expertise/insights/2018/feb/cryptocurren
cies-and-public-policy.html
https://www.oliverwyman.com/our-
expertise/insights/2018/oct/crypto-
assets.html
https://docsend.com/view/cys4cj2z5nkf4
mce
https://medium.com/@cv.alkan
https://medium.com/liquity/liquity-
decentralized-borrowing-5a4b0eb28efc
https://en.wikipedia.org/wiki/Stablecoin#
:~:text=Stablecoins%20are%20cryptocurr
encies%20designed%20to,precious%20me
tals%20or%20industrial%20metals)
https://data.worldbank.org/indicator/NY.
GNP.PCAP.CD?
end=2019locations=CNstart=1962vie
w=chart
https://www.economicshelp.org/blog/glos
sary/real-gdp-capita/
I II
R E F E R E N C E
42. Epilogue: Skills that I have acquired
S o f t S k i l l s
Active listening
Communication
Interpersonal skills
Leadership
Problem-solving
Time management
H a r d S k i l l s
Teamwork
Open-mindedness
Creativity
Organization
Presentation about
macroeconomics skills
PPT Making
Lucid Chart Making
Github
Jupyter Notebook
Information collecting
and processing
S o f t S k i l l s
43. 1. Describe fiscal and monetary policy, inflation,
unemployment, and economic growth in macroeconomic
models.
2. Illustrate and Explain different perspectives on
macroeconomic issues and models for the economic way
of thinking.
3. Conduct economic research independently and
creatively through 1) targeting an important and
interesting research question; 2) finding and vetting
sources to acquire information; 3) communicating research
results and contribution to the literature ; 4) Identifying
limitations of current research and future research topics.
4. Learn collaboratively, provide constructive critics to
peers’ work.
5. Fruitful take-away for personal career
a. A professional LinkedIn profile with a capstone project
research report and connections to interdisciplinary
scholars and Industry leaders. (Thanks!)
b. A project profiles with introductions, meeting records,
milestones achieved, presentation slides, and videos.
M y t a k e a w a y
( b a s e d o n E C O N 2 0 4 s y l l a b u s )