In a series of papers, Benhabib, Schmitt-Grohé and Uribe (2001a, 2001b, 2001c, 2002 and 2004) have shown that active interest rules may lead to very unexpected consequences: indeterminacy, deflation traps, large cyclical instability, and can even lead to chaotic dynamics under standard sets of...

In this paper we apply the techniques of symbolic dynamics and chaos control to the analysis of a labor market model which shows chaotic behavior and large volatility in employment flows. The possibility that chaotic dynamics may arise in modern labor markets had been totally strange to...