We analyze possible nonlinear exciton-exciton correlation effects in the optical response of semiconductors by using a time-dependent density-functional theory (TDDFT) approach. For this purpose, we derive the nonlinear (third-order) TDDFT equation for the excitonic polarization. In this equation, the nonlinear time-dependent effects are described by the time-dependent (non-adiabatic) part of the effective exciton-exciton interaction, which depends on the exchange-correlation (XC) kernel. We apply the approach to study the nonlinear optical response of a GaAs quantum well. In particular, we calculate the 2D Fourier spectra of the system and compare it with experimental data. We find that it is necessary to use a non-adiabatic XC kernel to describe excitonic bound states - biexcitons, which are formed due to the retarded TDDFT exciton-exciton interaction.
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