Assuming the stock market/housing market crash decreased consumer wealth, decreased business confidence, and decreased expected appreciation rates on houses (thus increasing perceived user cost of residential capital), the IS curve shifted left at the onset of the Great Recession (in the IS-LM model):
But this indicates that real interest rates would have fallen. Given that there was a liquidity crisis at the onset of the recession, I am guessing this did not happen. Did it? And if not, how could a liquidity crisis be accounted for in the IS-LM model?