NATO Defense Expenditures: Common Goals or Diverging Interests? A Structural Analysis
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By testing for structural breaks in defense expenditures, we determine the dates of change in the pattern of defense expenditures for the NATO allies. If NATO members are responding to a common threat, we expect to see similar breaks, in both direction and dates. for defense expenditures. The breaks should occur during major NATO strategy shifts such as the change from mutual assured destruction (MAD) to the doctrine of flexible response, and finally to the end of the cold war. We analyze whether NATO ally behavior is influenced by regional or alliance concerns.
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