The Galactic Recession: A case study


In honor of the rapidly approaching release of a new Star Wars movie, I wanted to follow-up on my article yesterday on humorous yet serious research with another light-hearted piece of scholarship.

It's a trap

This insightful and nerdy reference-laden paper from a Washington University engineering professor looks at the financial impacts that the destruction of two supermassive battle stations and the decapitation of the galactic government would have on the Star Wars universe. As a devoted Star Wars fan myself (if you haven’t already noticed), I find this an especially intriguing area of study because Star Wars: The Force Awakens and the books and videos games released with it are set to describe the chaotic years after the celebrations at the end of Return of the Jedi (spoilers in that link for those concerned).

Using estimates in U.S. dollars for the costs of constructing the two Death Stars ($193 quintillion and $419 quintillion respectively) Prof. Zachary Feinstein extrapolates the Imperial economy to have an annual “gross galactic product” (GGP) of $4.6 sextillion dollars.

Assuming, that the Galactic Empire’s banking sector held assets of around 60 percent of GGP, Feinstein modeled various scenarios for what would happen after the second Death Star was destroyed and the Empire presumably defaulted on its payments for the battle station and its predecessor.

He concluded that the Rebel Alliance would likely need to quickly provide a bailout equivalent to between 15 and 20 percent of the GGP to prevent the galactic defaults from triggering a massive recession. Since the Alliance was a relatively small insurgent group, it is highly unlikely that they would have had that amount of money available to inject into the economy they had newly inherited. This means that a prolonged economic depression could play a role in the setting to The Force Awakens. Just something else to think about it in 10 days, nerdy readers.