asuresh213/market-bubbles

Senior Year capstone project. Nucleation of Market Bubbles.

Market-Bubbles

Senior Year capstone project. Nucleation of Market Bubbles.

This project explores the extent to which homogenious nucleation equations can be used to model financial bubbles. In doing so, it translates various aspects of classical and modern nucleation theory of bubbles into the language of financial markets - in order to better study the indicators of a financial collapse, and thereby better predict potential market collapses that may occur in the future. The project builds a model using training data from the housing bubble of 2007. Upon sufficient training/extrapolation, the model was applied to current market trends to observe that we are currently in a bubble economy. This verifies with a lot of recent speculations from various economists. We conclude with reasonable evidence that there is indeed a very natural connection between the nucleation and growth of physical and economic bubbles. We also acknowledge the need for more research in this budding field.