Wednesday, 18 April 2012

The Independent: "Who wants to tax and spend? The IMF, that’s who.."

Link to The Independent

"I noted at the turn of the year that the IMF, since Christine Lagarde took over, had made it more and more obvious that it thought a number of countries including the US, Germany and (by implication) the UK, were tightening fiscal policy too fast.

"... the Fund wants us, for standard Keynesian reasons, to spend more on infrastructure (and housing) and increase welfare benefits for poor people (who will spend them), and pay with it by taxing the rich (those with a lower 'marginal propensity to consume'.  This would raise demand in the short term, without worsening the fiscal position.

"For those who see the Fund as being both anti-Keynesian on macroeconomic policy, and classically 'liberal' on microeconomic policy, this will come as something as a shock."

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