A spatiotemporal analysis of NATO member states' defense spending: how much do allies actually free ride?

Abstract

Concerns over free riding in NATO are widespread. An intuitive approach to analyzing free riding is treating it as a systematic pattern of spatial interdependence between the allies: how does a NATO member's defense spending react to changes in other allies' military expenditures? While recent work has found statistically significant free riding (negative spatial interdependence in the outcomes), it suffers from important limitations. First, this research does not adequately account for temporal dependence. Second, it does not quantify the effect of interest. Accounting directly for temporal dependence provides a meaningfully distinct perspective on the within-alliance dynamics, demonstrating that the spatiotemporal effect of free riding is, in fact, more substantial than its short-run effect, challenging inferences of static spatial models. We discuss the relevant practical and theoretical implications.