What can explain the large changes in aggregate demand that occur in the absence of any seemingly corresponding shock to the underlying state variables of the economy? We show that macroeconomic volatility can arise from dispersions of beliefs among agents. These dispersions give rise to bets...

We analyze global dynamics in the standard life-cycle model with production, showing that there can be a plethora of rational expectations dynamics, including "wobbly macro-dynamics". Depending on people's beliefs, the macroeconomy can bounce around infinitely, without converging, without...