Working Paper Abstracts – 1978
A community disaster model has been developed at the University of Pennsylvania as part of an NSF-RANN grant ENV-12370, “Mitigation and Recovery Policies for Natural Hazards.” The objective of the project is to describe the impact of a natural disaster on a community so as to provide guidance to policy makers in designing mitigation and recovery policies.
One of the more important areas of concern is the financial impact of the disaster. As a result, the community disaster model contains a financial sector which describes the changes which occur in the financial characteristics of households as a result of the disaster and subsequent recovery. The purpose of this paper is to describe this financial sector of the community disaster model, how and why it was developed, and how it may be utilized. First, the need for such a sector is reviewed. Next, the methodology to be used here for analyzing the financial impact of natural disasters on households is outlined. Then, the construction of the elements of the financial sector is discussed followed by an illustrative example. This illustrative example demonstrates the usefulness of the approach developed here for public policy analysis. Finally, the summary and conclusions are presented along with directions for future research.
This paper assesses the interaction among losses and expenses on insurance written, leverage employed and investment performance for a sample of 25 property-casualty companies during the decade ending 1976 and evaluates the impact of regulation and other factors upon internal profitability and market performance and risk. The period in question witnessed the concurrent emergence of double-digit inflation and adverse stock market behavior. In a single year, 1974, the property-casualty industry lost some 26% of its total surplus.
In this paper we show that even in incomplete markets a plausible firm objective function may be defined, and that this objective function coincides with the Arrow-Debreu objective function in complete markets. Our major theorem shows that a production plan may be found which will always win the approval of a majority of the firm’s initial shareholders. Furthermore, these shareholders are shown to be the only ones concerned with the firm’s production plans. Finally, it is shown that an equilibrium exists in which all firms choose plans approved by a majority of their shareholders.