Garett Jones writes about sticky-wage Keynesian economics.
there’s no failure of “effective demand” for final goods in a sticky-wage Keynesian world. The reason there’s so little output during a recession according to sticky-wage Keynesians is because high wages make output too expensive to produce.
I think that Keynesians have good reason to resist being boxed into a particular microfoundations model, or theory. I think they are better off just asserting that more spending leads to more output, and responding to the question of “why” with hand-waving. To me, Keynesian economics is nothing more and nothing less than the view that spending creates jobs and jobs create spending. The attempt to articulate microfoundations has never added value.
Incidentally, the Scott Sumner view is that nominal GDP creates jobs, which might appear to be close to the Keynesian view. However, Sumner argues that the central bank controls nominal GDP, which means that fiscal policy only affects the mix between private-sector and public-sector spending.
The Keynesian counter-argument is that the central bank is constrained in some way. Again, I think they are better off just asserting this rather than relying on some specific explanation, such as low nominal interest rates. First, there are powerful arguments that low nominal interest rates are not a constraint. Second, I do not think that Keynesians want to tie themselves down to a view that says that fiscal stimulus is completely unnecessary when interest rates are above zero.
For those of you not already familiar with my own views of macro, see the papers listed here.