As governments around the world bring in tax cuts and boost spending to combat the global recession, a study by the IMF said such programmes must be large but carefully designed.
“There is a strong case for doing too much rather than too little,” said Olivier Blanchard, the fund's chief economist. But, he added, tax cuts should be aimed at people likely to spend money rather than save it.
Although the IMF said it would resist giving a running commentary on policies, Mr Blanchard said signs of the stimulus plan emerging from the camp of US president-elect Barack Obama appeared to be hopeful. “The size corresponds roughly to what we think is needed,” he said.
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