Macroeconomics, 2nd Edition by Pearson

OPEN ECONOMY II: THE CURRENT ACCOUNT IN AN INTERTEMPORAL FRAMEWORK

369

The

practical application

of this is to postulate a continuation into the

indefinite future of the current policy stance and no change in the relevant

features of the macroeconomic environment. The

CURRENT

POLICY

STANCE

is then

deemed to be sustainable if its continuation in the indefinite future does not

violate solvency (budget) constraints.

Callen and Cashin

17

carry out exactly such an exercise. To the stock of

external debt to GDP

18

of 23 per cent

towards the end of 1998–1999; they add

an estimate of the stock of external equity liabilities calculated ...