The problem is that a huge swathe of mainstream and formerly mainstream macroeconomic viewpoints are classed as &quot;Keynesian&quot;, and the mainstream &quot;New Keynesian&quot; macroeconomic model you speak of which focuses on manipulating inflation to overcome resistance to real wage cuts and assumes a minimal role for fiscal policy is rather different from the traditional &quot;Keynesian&quot; (and &quot;Post Keynesian&quot;) emphasis on increasing net government spend to stimulate consumption in a downturn.<p>Pretty much any undergrad who&#x27;s read their introduction to national accounts and Keynesian concept of aggregate demand and multipliers can devise a set of simultaneous equations which will yield both a real wage fall and an unemployment rise in a basic stylised macro model if you also slash G and raise T (especially if the assumption is - as with Greece - that the expected debt servicing will largely be repatriated to overseas bondholders)