Or at least, WEO Chapters 3 and 4.
Chapter 3 is entitled “Will It Hurt? Macroeconomic Effects of Fiscal Consolidation”, and Chapter 4 is “Do Financial Crises Have Lasting Effects on Trade?”. Also online are Chapters 3 and 4 from the IMF Global Financial Stability Report.
Chapter 3 concludes that a 1% contraction in spending will result in a 1% reduction demand (consumption + investment) but only a .5% reduction in GDP because they reason the currency will fall and net exports will increase .5%.
That might be reasonable when one or two average countries need to cut back, but seems rather optimistic in the present situation.
Will it hurt?
Reduction in interest rates supportive of output growth with a correlative effect on household savings depletion.A Japanese sirakin (Takefuji did file for the same together with Promise during the 90s) is filing for bankruptcy.A testimony to the worldwide savings and incomes attrition.
ECB statistics September P23 Households savings and Gross fixed capital investment are showing negative growth in Q1 2010
http://www.ecb.europa.eu/pub/pdf/stapobo/spb201009en.pdf
The purchasing managers index does reflect the output growth in Europe but pointing down and so does the output growth worldwide (P10,P11 ECB monthly bulletin September)
http://www.ecb.int/pub/pdf/mobu/mb201009en.pdf
Where does it hurt? and where it will hurt more?
The debt ratios of non financial corporations (P47 chart 3), the household debt burden (chart 39 P50)
http://www.ecb.int/pub/pdf/mobu/mb201009en.pdf
The debts of financial corporations and banks ~13/14 trillions euros.
Governments debts trend and actual ((World bank SDDS/QEDS Data)
I suggest reading these instead:
http://arxiv.org/PS_cache/arxiv/pdf/0905/0905.0220v1.pdf
http://arxiv.org/ftp/arxiv/papers/0907/0907.4290.pdf
By D. Sornette.