PUB - Publikationen an der Universität Bielefeld

This manuscript focuses on the Italian judicial system and on how to shape a policy reform aimed at increasing court efficiency, taking the budget externalities generated by this production process into account. On the one hand, the authors identify the benchmarks and main drivers of judicial inefficiency, while, on the other hand, they show how incorrect model definition may mislead policy makers tackling this reform process, based on an analysis of the Directional Distance Function with and without bad outputs. According to the results, incorrect model definition causes a type I error equal to 17.99% and a type II error equal to 25.18%. As for the determinants of court performance, the current staff structure and civil procedures are the main drivers of inefficiency and, consequently, the areas in which policy makers could successfully take action. In view of the EU's recovery fund aimed at alleviating the economic impact of Covid-19, policy implications concern the opportunity to adopt these results and the collected benchmarks to drive one of the most important structural reforms in Italy, by leveraging the financial resources of the Next Generation EU package. Such a reform might be able to improve courts’ technical efficiency, while also maintaining the public budget under control.