creating large size posters (photoshop)

Hi, I'm trying to create a poster using Illustrator8 and 
Photoshop5.5 (Mac).  Could anyone advise me how large the 
digital graphic should be, when the size of this poster is 
approximately H730mm x W1000mm (H29" x W39")?
I've never done anything this large, and any help is 
appreciated.

First I've created basic objects in Illustrator.  
Next I plan to open them in PS to apply effects.
Now, a dialog box appeared; prompting me to decide the size 
of the graphic.
Do I have to set the size as same as the poster, or is it 
possible to make it somewhat smaller?

TIA
Kan Kawai

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