Has the Free‐Rider Problem Been Improved in NATO? Evidence From a Novel TVP‐VAR‐Based Connectedness Approach

Duc Hong Vo and Minh Phuoc‐Bao Tran

Scottish Journal of Political Economy, 2025, vol. 72, issue 4

Abstract: Previous studies have offered static evidence of free‐riding behavior in military alliances; however, dynamic evidence remains largely unexplored. To address this gap, this study employs a time‐varying parameter vector autoregressive (TVP‐VAR) connectedness approach. This method provides dynamic insights, allowing us to identify unusual shifts in military spending dependence among NATO member states over time. Using this method, we observe a significant anomaly in March 2014, when Crimea's administrative authority shifted from Ukraine to Russia. Our findings indicate that this event substantially curtailed free‐rider behavior in military expenditure among NATO members. Furthermore, consistent with the existing literature, the results show a marked decline in free‐riding behavior following 1975, attributable to the implementation of the flexible response doctrine.

Date: 2025
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