Wiener-Hopf factorization for a family of Levy processes related to theta functions

Mathematics – Probability

Scientific paper

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12 pages, published online at http://projecteuclid.org/euclid.jap/1294170516

Scientific paper

In this paper we study the Wiener-Hopf factorization for a class of L\'evy processes with double-sided jumps, characterized by the fact that the density of the L\'evy measure is given by an infinite series of exponential functions with positive coefficients. We express the Wiener-Hopf factors as infinite products over roots of a certain transcendental equation, and provide a series representation for the distribution of the supremum/infimum process evaluated at an independent exponential time. We also introduce five eight-parameter families of L\'evy processes, defined by the fact that the density of the L\'evy measure is a (fractional) derivative of the theta-function, and we show that these processes can have a wide range of behavior of small jumps. These families of processes are of particular interest for applications, since the characteristic exponent has a simple expression, which allows efficient numerical computation of the Wiener-Hopf factors and distributions of various functionals of the process.

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