Wages Behaviour and Unemployment in Keynes and New Keynesians Views. A Comparison

The paper compares different strands of New Keynesian Economics with respect to Keynes's original work on wages, describing which are the most relevant differences and analogies. In particular, two issues are analysed in detail. First, the explanations provided by Keynes and New Keynesians of nominal and real wages behaviour. Second, the different theories and interpretations concerning the ability of flexible nominal wages in assuring full employment in the economy. It is argued that, although persistent involuntary unemployment is acentral and continuing problem both in Keynes and New Keynesians views, referring to the role of nominal and/or real wages behaviour in explaining unemployment, New Keynesian theories present features which differ, sometimes substantially, from the ideas and concepts developed by Keynes in his General Theory.