  In the General Theory, Keynes remarked that the economy's state depends on
expectations, and that these expectations can be subject to sudden swings. In
this work, we develop a multiple equilibria behavioural business cycle model
that can account for demand or supply collapses due to abrupt drops in consumer
confidence, which affect both consumption propensity and investment. We show
that, depending on the model parameters, four qualitatively different outcomes
can emerge, characterised by the frequency of capital scarcity and/or demand
crises. In the absence of policy measures, the duration of such crises can
increase by orders of magnitude when parameters are varied, as a result of the
"paradox of thrift". Our model suggests policy recommendations that prevent the
economy from getting trapped in extended stretches of low output, low
investment and high unemployment.
