A positive shock to multi-factor productivity increases the marginal productivity of labor and therefore real wages. When the desired composition of output changes, people have to move between sectors. But the Nominal view sees the process as slower and less even due to short-term nominal rigidities. The Great Depression 1. This is the standard rebuttal to Real theories in general, and standard RBC models in particular.
Technology shocks combined with intertemporal labor supply seems absurd.
NK models with real rigidities can have mass involuntary unemployment, but it is not clear why the magnitude of involuntary unemployment would have increased so much during the downturn. NK models with nominal rigidities can readily appeal to Friedman's explanation for the downturn. Duration of the GD is a problem for all theories, and is perhaps what made Dinosaur Keynesianism plausible to begin with. B. Oil shocks 1. This is probably the best example the RBC literature has put forward, and the timing seems right during the 1970's. 2.