Title
Net spills among NATO allies: Theory and empirical evidence from dynamic quantile connectedness
Authors
Year of publication
2023
Published in
Article type
scientific article
Publication language
english
Keywords
EN
- defence spending
- alliance theory
- dynamic quantile connectedness
Abstract
EN The paper draws on the economic theory of alliances to stress the importance of considering both benefits and costs arising from the interaction between member states of a military alliance in terms of defence expenditure on equipment. We expand the theory of alliances to incorporate the spills that stem from the obligations of each ally by introducing the notion of spill-outs and net spills, the latter measured as the difference between spill-in and spill-out effects. To assess the net spills contribution of each of the members to the alliance, we test for empirical evidence of net spills among a group of North Atlantic Treaty Organization (NATO) allies, applying time-varying Dynamic Quantile Connectedness analysis. The results that stem from our model considering the cost of spill-outs suggest that there are strong incentives among the allies for free-riding behaviour. In line with our theoretical model, our empirical analysis shows that it is only during crisis period that NATO member-states contribute actively to the alliance, something that has become increasingly clear since the recent Russian invasion of Ukraine.
Pages (from - to)
21 - 37
License type
CC BY (attribution alone)
Open Access Mode
open journal
Open Access Text Version
final published version
Release date
29.12.2023
Date of Open Access to the publication
at the time of publication
Ministry points / journal
100
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