Has Spain been free-riding in NATO? An econometric approach

Abstract

This paper examines the possible free-riding behaviour followed by Spain since the country joined NATO in 1982. Using a joint product model, we specify a reduced-form equation for the Spanish demand for military expenditure during the period 1977-1997. Our empirical estimates suggest that Spain could have been free-riding on NATO during this period. A possible more specific free-rider behaviour by Spain in relation to some of its Mediterranean military allies (France, Italy and Portugal) is examined as well.