Government investment in education helps fight financial crisis, says IMF

The IMF has calculated multipliers for three policy options: tax cuts, infrastructure investment and "other" government spending. Public education would be included in the latter.

The paper says that the "other" category includes additional spending on safety nets, assistance to small and medium enterprises, support for housing markets and transfers to state and local governments. In many North American and European countries, a primary example of transfers to state and local governments is for funding public education.

The IMF assessment makes the point that “other” government spending has a considerably larger multiplier than tax cuts (1.0 vs 0.6), although infrastructure investment has an even higher multiplier (1.8 vs 0.6). Clearly, tax cuts are the least effective policy option.

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