EU Demand for Defense, 1990–2019: A Strategic Spatial Approach

For 1990–2019, this study presents two-step GMM estimates of EU members’ demands for defense spending based on alternative spatial-weight matrices. In particular, spatial connectivity is tied to membership status, contiguity, contiguity and power projection, inverse distance, arms trade. At a Nash equilibrium, our demand equations are derived explicitly from spatially game-theoretical model alliances. Myriad linkages among members provide robust free-riding finding, which differs the non-spatial literature spending. Even though applies common trade policies allows unrestricted labor movement members, responses adhered those alliance. Moreover, exhibits positive GDP transnational terrorist attacks, negative response population. During sample period, did not view Russia as military threat.