See A. Crawford, C. Graham, and É. Bordeleau, “Regulatory Constraints on Leverage: The Canadian Experience,” Bank of Canada Financial System Review (June 2009): 45–50. 3  See M. K. Brunnermeier and L. H. Pedersen, “Market Liquidity and Funding Liquidity,” Review of Financial Studies, 22, No.
While the assets and agents involved and the triggering mechanisms differ from one cycle to the next, the cycles have tended to produce significant deadweight costs and distortions in the real economy, both during the upswing and during the subsequent retrenchment, and this is especially significant the more the financial system is leveraged.