I have recently started thinking about this issue while speculating on the relationship between IS-LM model and AD-AS model. Of course, the IS-LM is a short-run model and may not be adequate to think about the long run. However....
First, assume that prices are sticky in the short run. All of sudden, productivity is expected to be improved and potential output increases. Then LRAS curve will shift right while the SRAS curve stays the same. There is no output gain because prices of goods and services do not fall as the supply increases: the consumers cannot purchase them because their wages are so sticky that they do not rise as potential output increases; their bosses insist they will raise wages only if their goods are really sold. As a result, there is no change in the money market; there is no change in the goods market. The IS-LM curves stay the same.
Second, assume that prices are flexible. The SRAS curve is upward sloping. As much as the previous model, the LRAS curve shifts right as productivity is enhanced. Unlike the previous model, however, the SRAS curve shifts right too. Even though the firms cannot expect their absolute input costs not to go down, their relative input costs to output will go down. If they lower prices, then more goods and services at lower prices. As a result, output will really grow while the price level falls. Since the price level goes down, the real money supply will increase, lowering interest rate. Then the LM curve will shift right; since the low price level induces the great consumption, the IS curve will shift right, too.
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