The international backdrop to this period was the so-called “great moderation”, in which there was a decline in macroeconomic variability.
There were still business cycles but downturns were much less severe than in the 1970s or 1980s, inflation was low and not very variable, which meant that nominal interest rates also were generally low and not very variable, and compensation for risk became very modest.3  3  There was, of course, a nagging problem of periodic financial panics.