But arguably, the growing stability of the world economy over the past decade may have encouraged investors to accept increasingly lower levels of compensation for risk. They are exhibiting a seeming willingness to project stability and commit over an ever more extended time horizon.
Growing leverage of all kinds, whether on banks, corporates, households, or governments, led to the financial crisis of 2008–11. Some of the private debt has morphed into government liabilities, but the overall level of debt in industrial countries as a fraction of GDP is still growing. 5 Governments that are not forced by market pressures to undertake productivity-enhancing reforms prefer to delay them.