Has the Free-Rider Problem Been Improved in NATO? Evidence From a Novel TVP-VAR-Based Connectedness Approach

Previous studies have offered static evidence of free-riding behavior in military alliances; however, dynamic evidence remains largely unexplored. To address this gap, this study employs a time-varying parameter vector autoregressive (TVP-VAR) connectedness approach. This method provides dynamic insights, allowing us to identify unusual shifts in military spending dependence among NATO member states over time. Using this method, we observe a significant anomaly in March 2014, when Crimea's administrative authority shifted from Ukraine to Russia. Our findings indicate that this event substantially curtailed free-rider behavior in military expenditure among NATO members. Furthermore, consistent with the existing literature, the results show a marked decline in free-riding behavior following 1975, attributable to the implementation of the flexible response doctrine.