Offhand, I can think of three issues with the IS/LM model:
- The LM curve shows a stock equilibrium, while the IS curve shows a flow equilibrium. Thus, it is not clear to me that they can be graphed on the same diagram.
- Both curves are drawn for a given set of expectations. If one curve shifts, the expectations upon which the other is drawn can hardly remain constant. Thus, both curves must shift and the equilibrium point becomes indeterminate.
- The curves replicate the separation between nominal and real values that Keynes was trying to transcend with his monetary theory of production. Thus, the model cannot be a valid representation of the theory Keynes was so laboriously trying to express.