Institutional diversity in the Euro area: Any evidence of convergence?

Salvador Pérez-Moreno, Elena Barcena-Martin and Jo Ritzen ()
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Jo Ritzen: UNU-MERIT, Maastricht University

No 2017-047, MERIT Working Papers from United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT)

Abstract: The institutional characteristics of the 19 Euro countries, such as Government efficiency or undue influence or corporate ethics, have diverged in the period 2006-2015. This endangers the sustainability of the EMU, as institutional characteristics are an important element of competitiveness. We find that the overall inequality in the state of institutions across the EMU, as measured by the Gini coefficient, increased. The institutional changes across Euro area countries are linked both to the differences in the intensity of the financial and economic crisis (likely to have a two-way causality) as well as the policy responses in terms of fiscal consolidation applied. The empirical findings tend to support the call for structural reforms enhancing institutional quality in order to shorten the institutional gap between 'core' and 'periphery' Euro area countries.

Keywords: institutions; convergence; beta-convergence; inequality; Euro area; competitiveness (search for similar items in EconPapers)
JEL-codes: O43 O47 O52 (search for similar items in EconPapers)
Date: 2017-10-04
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Persistent link: https://EconPapers.repec.org/RePEc:unm:unumer:2017047

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