Comparative economic analysis vs moralistic tales: an application to the myth of frugality

In 2020 the European Union designed a stimulus programme aimed at supporting Member States’ economic recovery following the outbreak of the Covid-19 pandemic. Several countries were reluctant to endorse the programme rejecting the idea of fiscal expansion as a means of cushioning the impact of the health crisis. They dubbed themselves ‘the frugals’, a term extensively used in media coverage from then on. The narrative of thrifty versus profligate economies has been a leitmotiv in policy negotiations at the EU level despite the fact that no economic school of thought defines macroeconomic characteristics in terms of frugality or wastefulness. In this paper we analyze to what extent the economic behavior of European countries can be characterized along those lines by assessing observable economic indicators related to public and private indebtedness, fiscal income and spending, characteristics of the welfare state, the labor market and contributions to economic growth from internal and external demand. We draw from three main theoretical approaches in order to choose meaningful indicators for comparing different economic structures.