Typically closing the deficit is done by increasing (S-I) part of the CA equation. So we want to increase S and reduce I. We can achieve this if real rates increase → encouraging national saving and discouraging investing/borrowing to invest. Current account surplus, per the curriculum, reflects strong asset prices, therefore low discount rates (and low real rates). Vice versa, current account deficit can signify weakness, therefore high required returns (and high real rates) as compensation for higher risk.
I do not understand this logic at all. We want to savings and reduce investments? where does the savings go then? Investments increases the productivity ?