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Gallup Democracy in Exercising the NATO Membership Option: The Cases of Finland and Sweden

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  • Vesa Kanniainen

Abstract

The paper asks whether the exercising of the NATO membership option is justified for Finland and Sweden in the light of their geopolitical state after Russia’s attack on Ukraine. It was the Gallup democracy, which launched the political moves towards the membership. In both countries, the majority of people turned to favor the membership within 2-3 months. Finland activated first. Sweden was fast in catching up with the Finnish process. The theory of option pricing is employed to analyze the optimal timing of exercising the option when the uncertainty regarding the value of the membership is rapidly diluting. The Turkish intervention in the membership process after the membership applications of Finland and Sweden were delivered suggests a bargaining phase once the application is delivered. Finally, the effects of the Gallup surveys on the political equilibrium are analyzed in a voter-politician model.

Suggested Citation

  • Vesa Kanniainen, 2022. "Gallup Democracy in Exercising the NATO Membership Option: The Cases of Finland and Sweden," CESifo Working Paper Series 9876, CESifo.
    • Handle: RePEc:ces:ceswps:_9876
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp9876.pdf
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    References listed on IDEAS

    as
    1. Georgy Egorov & Konstantin Sonin, 2013. "A Political Theory of Populism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(2), pages 771-805.
    2. Vesa Kanniainen & Staffan Ringbom, 2017. "The Option Value of Membership in a Defense Alliance," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 73(4), pages 382-401, December.
    3. Avinash K. Dixit & Robert S. Pindyck, 1994. "Investment under Uncertainty," Economics Books, Princeton University Press, edition 1, number 5474.
    4. Manfred Holler & Peter Skott, 2005. "Election campaigns, agenda setting and electoral outcomes," Public Choice, Springer, vol. 125(1), pages 215-228, July.
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    More about this item

    Keywords

    Gallup democracy; defense alliance; option value of membership;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War

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