Benchmarking institutional variety in the Eurozone: an empirical investigation

The European debt crisis has shown how the future of the EU depends on the willingness of each member country to implement responsible policies, avoid moral hazard and non-cooperative attitudes, and ensure stability and soundness. However, the European institutional variety implies that each member country reacts differently to shocks and policies, follows a different path of recovery and adapts in different ways to common institutions, including the common currency. Helping the countries to converge towards a situation that guarantees well-being, stability and development at national and community level is the task of the European benchmark. The latter is a framework inspired by European treaties that trough the distance to frontier score methodology aims at measuring member countries’ performance and at identifying inefficiencies and negative externalities inside economic, social and political institutions of each member country. The paper presents an empirical investigation of the European benchmark. According to the results obtained, all countries can improve their performance and none of them can be considered a model for the others. However, Mediterranean and post-communist countries have to face more challenges and therefore undertake greater efforts.