model
IS-LM
The graphical macroeconomic framework of Hicks (1937) and Hansen (1953), pairing a goods-market equilibrium (IS) with a money-market equilibrium (LM) to determine output and the interest rate jointly. The textbook workhorse of the postwar neoclassical synthesis.
Stub entry. Origin moment is a placeholder; the canonical IS-LM origin is Hicks 1937 (to be added).
IS-LM presents a synthesis of Keynes’s General Theory in two intersecting curves on output-interest-rate axes. It became the canonical postwar macro teaching device — Samuelson, Hansen, Solow, Tobin all worked within it — and is the framework against which the rational-expectations and microfoundations critiques of the 1970s were directed.
Its critics within and beyond the Keynesian tradition argue that the IS-LM apparatus assumes price rigidity it does not justify, treats expectations naively, and abstracts from the financial and balance-sheet mechanisms that make recessions persistent. New Keynesian models retain its skeleton with explicit microfoundations; Real Business Cycle and DSGE models replace it.