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:
“to become a pimp
Or deal in fake jewelry or ruin a fine tenor voice
For effects that bring down the house could happen to all
But the best and the worst of us . . .”
—W.H. (Wystan Hugh)
“The machines that are first invented to perform any particular movement are always the most complex, and succeeding artists generally discover that, with fewer wheels, with fewer principles of motion, than had originally been employed, the same effects may be more easily produced. The first systems, in the same manner, are always the most complex.”
—Adam Smith (1723–1790)
“Each of us, even the lowliest and most insignificant among us, was uprooted from his innermost existence by the almost constant volcanic upheavals visited upon our European soil and, as one of countless human beings, I can’t claim any special place for myself except that, as an Austrian, a Jew, writer, humanist and pacifist, I have always been precisely in those places where the effects of the thrusts were most violent.”
—Stefan Zweig (18811942)