"The supply side of the model in Keynes’s General Theory (1936) has two key features. First, the nominal wage is completely unresponsive to current period developments (at least over some range) … Second, for reasons that Keynes did not specify explicitly, the wage that prevails in the absence of nominal rigidity is above the level that equates supply and demand. Thus, implicitly, the labor market has some non-Walrasian feature that causes the equilibriumreal wage to be above the market-clearing level. … Fluctuations in the demand for goods lead to movements of employment and the real wage along the downward-sloping labor demand curve. Higher demand, for example, raises the price level. Thus it leads to a lower real wage and higher employment. … This view of the supply side of the economy therefore implies a countercyclical real wage in response to aggregate demand shocks. This prediction has been subject to extensive testing beginning shortly after the publication of the General Theory. It has consistently failed to find support. As described in the next section, our current understanding suggests that real wages are moderately procyclical."