Exact solutions for ruin probability in the presence of an absorbing upper barrier

Abstract

An explicit solution for the probability of ruin in the presence of an absorbing upper barrier was developed by Segerdahl (1970) for the particular case in which both the interoccurrence times between successive claims and the single claim amounts follow an exponential distribution with unit mean. In this paper we show that his method of solution may be extended to produce explicit solutions for two more general types of single claim amount distribution. These are the gamma distribution, denoted γ(a), where a is an integer, and the mixed exponential distribution. Comparisons are drawn between this approach when the upper barrier tends to infinity, and the classical solution for ruin probability in these particular cases given in Cramér (1955).     

Non-competitive imports and gains from trade

The paper argues for the explicit inclusion in international trade models of goods which cannot be produced in the importing country. Non-competitive goods require a product-requisite factor which is not universally available. International trade in these goods generates much greater per-unit gains from trade than trade in ordinary goods which can be produced in both (all) countries. Omission of these goods from models of international trade leads to the possibility of a gross underestimation of the difference between autarkic and with-trade income levels. The omission of these goods also neglects some dimensions of policy which are important in the real world, such as sanctions.     

Book Reviews

Caves, Richard E., and Associates, Industrial Efficiency in Six Nations, Cambridge, MA: MIT Press, 1992, xii + 492 pages.

National Research Council, Panel on Foreign Trade Statistics, Behind the Numbers: U.S. Trade in the World Economy, Washington, D.C.: National Academy Press, 1992, xi + 297 pages.

Fischer, Klaus, and George J. Papaioannou (eds.), Business Finance in Less Developed Capital Markets, Westport, CT: Greenwood Press, 1992, xi + 391 pages.

Krugman, Paul R., Currencies and Crises, Cambridge, MA: The MIT Press, 1992, xix + 219 pages.

Howell, Thomas R., Alan Wm. Wolff, Brent L. Bartlett, and R. Michael Gadbaw, Conflict Among Nations: Trade Policies in the 1990s, Boulder, CO: Westview Press, 1992, xiv + 633 pages.

Starr, Martin K., Global Corporate Alliances and the Competitive Edge: Strategies and Tactics for Management, New York: Quorum Books, 1991, xiii + 236 pages.

Liesch, Peter W., Government Mandated Countertrade, Aldershot, England: Avebury, 1991, xv + 172 pages.

Kotabe, Masaaki, Global Sourcing Strategy: R&D, Manufacturing, and Marketing Interfaces, New York: Quorum Books, 1992, xviii + 237 pages.     

International competitiveness: A review article

Michael E. Porter's book, The Competitive Advantage of Nations (Porter, 1990), throws interesting new light on the international competitiveness of national firms. It deserves wide readership but this is likely to be handicapped by its length (855’ pages) and discursive style. Section I of this review article describes the approach of the book, Section II presents a short version of the main thesis, Section III offers a critical review of the argument, and, finally, Section IV examines the implications of the volume for the theory of international trade.     

The Communicative Value of the Auditor's Report

Communicating the results of the audit is a crucial part of the audit process. This potentially enables the users of financial reports to assess the quality of the audit, which will in turn contribute to their assessments of financial reporting quality. This research reports the results of a verbal protocol study of 16 financial analysts to assess how they use an auditor's report as part of a company evaluation. Auditors’ reports perse are found to be important to analysts in that they signal a level of reliability in the financial statements. However, the content of the auditor's report, including the additional content of the recently issued longer form auditor's report (ISA 700, ASA 700), generally was not attended to by the analysts. This suggests the communicative value of the auditor's report is minimal beyond signalling the elevated reliability of the financial statements.     

Antecedents and Effects of Parent Control in International Joint Ventures

Using a sample of 90 US–China manufacturing joint ventures, this study empirically tested a grounded-theory model of the antecedents and the effects of the structure of parent management control in international joint ventures. The results suggest that competitive and cooperative dynamics occur simultaneously between joint venture partners. On one hand, the relative bargaining power between the partners, derived from the negotiation context and from contributing critical resources to the venture, respectively, is a determining factor in management control; and the level of operational control exercised by a partner over the venture has a positive effect on the extent to which this partner's strategic objectives are achieved. On the other hand, the quality of the interpartner working relationship was found to have a strong, positive relationship with the achievement of strategic objectives for both partners.     

The Social and Geopolitical Origins of State Transformation: The Case of South Korea

Recent debates surrounding state transformation in East Asia have tended to examine either how transformations in domestic social relations undermined the efficacy of the developmental state, or how mobilisation of coercion and consent at the international level led to the adoption of neoliberal policies. Through an examination of the case of Korea, however, this article seeks to move beyond this division between ‘domestic’ - and ‘international’ - centred analyses to provide a framework wherby mutually constitutive transformations taking place both at the level of social relations of production and at the level of the international order can be integrated to produce a conjunctural analysis of state transformation. Through deploying Gramsci's concept of passive revolution, an analysis of social and geopolitical underpinnings of korean late development is provided in order to provide an alternative explanation of the causes and nature of transition towards the neoliberal state since the latter part of the twentieth century.