EQUILIBRIUM-MODELS DISPLAYING ENDOGENOUS FLUCTUATIONS AND CHAOS - A SURVEY

This paper surveys current developments in dynamic general equilibrium theory concerned with conditions under which endogenous fluctuations are possible. Existing contributions are divided into two classes: the larger one consists of models with a unique perfect-foresight equilibrium, while the second includes models where equilibrium is indeterminate and the set of equilibria involving endogenous fluctuations includes 'sunspots equilibria'. While the two classes of models involve oscillations of different natures and with different policy implications, we show that both are consistent with optimizing behavior and competitive equilibrium. © 1990.