Chaotic Behavior in Monetary Systems: Comparison among Different Types of Taylor

Abstract — The aim of the present study is to detect the chaotic behavior in a monetary economic relevant dynamical system. The study employs three different forms of Taylor rules: current, forward and backward looking. The result suggests the existence of the chaotic behavior in all three systems. In addition, the results strongly represent that using expectations in policy rule especially rational expectation hypothesis can increase the complexity of the system and leads to more chaotic behavior