This is an excellent short summary of the shortcomings of New Keynesian Macroeconomics.
Willem Buiter of LSE is writing for the Financial Times. His latest post is a “takedown” of modern macroeconomics. David Andolfatto critiques modern New Keynesian (NK) models and then unloads on Buiter:
My beef with the NK paradigm is this in a nutshell. It is a model that ignores money and typically, financial markets too. It embeds unexplained “frictions,” like sticky prices. It embeds conceptually vacuous “shocks” like “mark-up shocks” or “inflation shocks.” It focusses on the policy problem of “stabilizing” the economy in the face of these little itty-bitty shocks. It is not a model designed to understand financial crisis. It is a model designed to legitimize what central bankers always believed they should be doing in the first place: adjust the short-term interest rate to stablize the economy around a predetermined long-run trend. This is why the NK model is the dominant paradigm; and this is why those…
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Utopia, you are standing in it! 
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