This is a must-read article from the Telegraph, citing latest research evidence from the IMF.
It looks like Oliver Blanchard, Chief Economist at the IMF is promoting his Keynesian values again. Originally, the high-priest of austerity, the IMF is now promoting the benefits of massive public sector investment in infrastructure – the cost at the margin is higher levels of national indebtedness. Watch out for big name economists to pile in to the debate (it will help sell their latest books).
Of course, these viewpoints are highly politically charged too. It puts the likes of UK Chancellor, George Osborne, on the back foot – critics will argue that Osborne’s austerity is politically motivated in favor of a smaller government.