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Allokation der Verteidigungsausgaben in der NATO / Allocation of Defence Expenditures in NATO

Author

Listed:
  • Maneval Helmut
  • Park Byeungkwan
  • Kaindl Stefan

    (Universität der Bundeswehr München, Fakultät für Wirtschafts- und Organisationswissenschaften, Volkswirtschaftslehre, insbesondere Makroökonomie und Wirtschaftspolitik, D-85577 Neubiberg.)

Abstract

Theoretically the paper is based on the framework of models of the economic theory of alliances. The behaviour of the members of an alliance with regard to defence spending is analyzed. On the one hand national security is assumed to be a pure public good (Olson and Zeckhauser), on the other hand a joint product good (Sandler and Murdoch). Furthermore it is differentiated between hypotheses for allocation processes of the Cournot-Nash type and Lindahl type respectively. The empirical part of the paper includes 10 members of NATO (Belgium, Canada, Denmark, France, Germany, Italy, The Netherlands, Norway, United Kingdom, USA). The demand for national security (defence expenditures) is estimated for different periods: 1) 1960-1992 without threat variable (military spending of the Soviet Union), 2) 1960-1973 and 1974-1987 (with threat variable) to see whether the behaviour of members has changed in response to the strategy change of NATO from Massive Retaliation to Flexible Response. A comparison by means of the j-test displays that the Cournot-Nash as well as the Lindahl hypotheses contribute relatively little to identify the actual decision within NATO members.

Suggested Citation

  • Maneval Helmut & Park Byeungkwan & Kaindl Stefan, 1998. "Allokation der Verteidigungsausgaben in der NATO / Allocation of Defence Expenditures in NATO," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 217(6), pages 681-700, December.
    • Handle: RePEc:jns:jbstat:v:217:y:1998:i:6:p:681-700
    DOI: 10.1515/jbnst-1998-0603
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