April 2011

Global Imbalances and US Military Expenses

RIEAS Publications cover

This paper argues that the global current account imbalances, independently of their contribution to the 2007/8 financial crisis, fed US military expenses as well. The main argument is that since: 1) public resources finance military expenses; 2) US run double deficits again after 2000’s; 3) US were particularly hit from the 2007 crisis; 4) global imbalances were already established when the crisis occur. How US did manage to maintain the same level of defense expenses and even slightly increase them in 2009, if not thanks to the global imbalances themselves that injected liquidity in the US?

Download: