Question 5: What does a sustainability perspective imply?
Answer:
Servicing that additional obligation would add, say, 2%–3% of GDP to the current account deficit forever. Adding that to the baseline projection of 3% would mean that the current account deficit would remain in the 5%–6% range even after the infrastructure spending ended, so net foreign liabilities would still be accumulating rapidly.
Closing that gap will require a very large increase in net national saving: 5%–6% of annual GDP in addition to the 3% reduction in infrastructure spending when the program ends.
Standard macroeconomic analysis implies that such an adjustment would require some combination of a very deep recession and a very large depreciation in the real value of the Atlandian currency (i.e., the real Sd/f exchange rate must increase sharply). As soon as investors recognize this, a crisis is almost certain to occur. Bond yields would increase sharply, and equity prices and the currency will fall substantially.
请问如何理解答案？ 特别是第三段。谢谢
