One could argue—and I would argue—that the most interesting and important line of work in current macro theory is the attempt to reconstruct plausible microeconomic underpinnings for a recognizably Keynesian macroeconomics. The best developed approach to this task, which has just achieved at least a local maximum in Malinvaud (1977), starts from the presumption that the nominal wage, or some other equally important price, is sticky. I say “sticky” rather than “rigid” because the wage is allowed to move; the presumption is only that it does not move quickly enough to clear the labor market in a reasonable time.

A theory that rests on sticky wages owes itself an explanation of wage stickiness. Why does the wage not move flexibly to clear the labor market? The literature has produced several answers to that question, generally not mutually exclusive.