Expectations and chaos in an aggregate economic system with intertemporal consumption choices

This paper shows how an aggregate economic system dynamically evolves when intertemporal consumption choices are modelled by a particular type of expectations about future consumption. Non-linearity is related with endogenous cyclic dynamics; steady states may occur, but a possible chaotic behaviour is due to the expectations model. This analytical study provides an example of endogenous economic cycles, that may lead to a chaotic dynamics, which is generated only by endogenous causes (like expectations) and not by exogenous shocks or exogenous aleatory events.