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A Theoretical and Empirical Analysis of NATO

Author

Listed:
  • James C. Murdoch
  • Todd Sandler

    (Department of Economics, University of Wyoming)

Abstract

This article improves and refines the joint product model so that it can better analyze nuclear war alliances. In particular, the refined models demonstrate that allies' responses to defense spillovers depend upon the consumption relationship (i.e., complementarity or substitutability) of the jointly produced defense outputs as well as the allies' income responsiveness. The stability and size of alliances are also related to the consumption relationship of the joint outputs. This article uses a generalized least-squares estimate on data for 12 NATO allies to estimate their defense expenditure functions. The statistical results conform well with our predictions.

Suggested Citation

  • James C. Murdoch & Todd Sandler, 1982. "A Theoretical and Empirical Analysis of NATO," Journal of Conflict Resolution, Peace Science Society (International), vol. 26(2), pages 237-263, June.
    • Handle: RePEc:sae:jocore:v:26:y:1982:i:2:p:237-263
    DOI: 10.1177/0022002782026002003
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    References listed on IDEAS

    as
    1. Smith, R P, 1980. "The Demand for Military Expenditure," Economic Journal, Royal Economic Society, vol. 90(363), pages 811-820, December.
    2. Todd Sandler, 1977. "Impurity Of Defense: An Application To The Economics Of Alliances," Kyklos, Wiley Blackwell, vol. 30(3), pages 443-460, August.
    3. Srivastava, V. K. & Dwivedi, T. D., 1979. "Estimation of seemingly unrelated regression equations : A brief survey," Journal of Econometrics, Elsevier, vol. 10(1), pages 15-32, April.
    4. Sandler, Todd & Tschirhart, John T, 1980. "The Economic Theory of Clubs: An Evaluative Survey," Journal of Economic Literature, American Economic Association, vol. 18(4), pages 1481-1521, December.
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