Research Experiences for Undergraduates 2011-Project Presentations

Research Experiences for Undergraduates 2011 Home Logistics Participants Schedule Photos Project Presentations Final Papers

"URBAN SCALING IN THE UNITED KINGDOM"

Kevin Carlson, Indiana University

Recently, many scaling laws have been reported to model relationships between American urban areas' population and a broad class of economic metrics. Such techniques improve on traditional per capital measures, which risk confounding the general nonlinear effects fundamental to the nature of dense human populations with deviations from these due to local influences. We intend to extend this work in an analysis of data regarding energy use and criminal activity collected in the United Kingdom. We will aggregate reports from Local Administrative Units to the city level, considering all 65 UK centers with population above ca. 100,000, and apply maximum likelihood estimation techniques to compare various distributions' explanatory power over the observed trends. If power-law scaling is found, we will have a broader domain of support for this theoretical explanation of urban phenomena and the impetus to further generalize understanding of this fundamental constraint on mass social phenomena. The complement to this work will be measuring cities' deviations from the theoretical predictions derived in this way, which information may �find applicability to a range of further research in urban planning and public policy.

Mentor: Luis Bettencourt

"A Network Approach to Interbank Lending and Systemic Risk"

Thomas Catanach, University of Notre Dame

The recent global financial collapse has highlighted the need for a more complete understanding of systemic risk within financial markets, and particular attention has been devoted to the risk stemming from the interconnectedness of banks and other financial entities. We intend to study models of banks with linked balance sheets forming a weighted directional network where edges correspond to interbank assets and liabilities. The study of systemic risk in financial networks will first be addressed using traditional static methods of stress tests, in particular to characterize the emergence of cascading failures stemming from a single bank default. With this approach we will also study the effects of different network topologies on contagion, focusing in particular on the differences between homogeneous and heterogeneous degree distributions. After exploring the static model, we will begin to create a more realistic model in which consumer deposits, interbank loans, external assets, investments, prices, and interest rates are all dynamic and bank assets, liabilities, and investment opportunities are heterogeneous. This model will help us understand economic cycles in which bank assets grow through investment but then fluctuations in assets/liabilities produces a small number of bank defaults which cause a liquidity shortage and eventually propagate to systemic collapse. Through these analysis we hope to explain the robust yet fragile nature of the global financial system, and the fact that banks seeking to minimize their individual risk can inadvertently increase the risk of failures at the systemic level.

Mentor: Fabio Caccioli