Effects
It has been argued that the greater predictability in economic and financial performance associated with the Great Moderation caused firms to hold less capital and to be less concerned about liquidity positions. This, in turn, is thought to have been a factor in encouraging increased debt levels and a reduction in risk premia required by investors.. According to Hyman Minsky the great moderation enabled a classic period of financial instability, with stable growth encouraging greater financial risk taking.
Read more about this topic: Great Moderation
Famous quotes containing the word effects:
“Virtues are not emotions. Emotions are movements of appetite, virtues dispositions of appetite towards movement. Moreover emotions can be good or bad, reasonable or unreasonable; whereas virtues dispose us only to good. Emotions arise in the appetite and are brought into conformity with reason; virtues are effects of reason achieving themselves in reasonable movements of the appetites. Balanced emotions are virtue’s effect, not its substance.”
—Thomas Aquinas (c. 1225–1274)
“If I had any doubts at all about the justice of my dislike for Shakespeare, that doubt vanished completely. What a crude, immoral, vulgar, and senseless work Hamlet is. The whole thing is based on pagan vengeance; the only aim is to gather together as many effects as possible; there is no rhyme or reason about it.”
—Leo Tolstoy (1828–1910)