Clearly, from the Austrian School's point of view, we cannot divorce saving from growth. It should also be equally clear that the usual definition of saving and growth as forgone consumption, though true, is totally inadequate for the task at hand and tells us nothing of the process. He then claims that Solow's model of economic growth is usually used to explain rising savings increase growth. That Solow's model assumes a closed economy with full employment of resources is totally irrelevant to the 'savings investment' debate. Toohey seems to think that because Carnahan and Camilleri pointed out that in an open economy there is no reason why domestic savings should equal domestic investment has dealt a body blow to the argument for more savings.
Sound economists argue that in the absence of a monetary disturbance savings equal investment.
They never argue that only domestic savings could equal investment because they fully recognise, even though they do not always state it, that domestic savings could and are augmented with foreign savings. They call it foreign investment. That Camilleri and Carnahan can draw from this the conclusion that the link between higher savings and growth beggars belief. Reducing its own savings means competing for foreign savings which, if successful, will only reduce investment elsewhere while raising domestic interest rates. It seems that Carnahan and Camilleri believe that they have escaped the above argument by referring to studies that claim to show that savings follow growth.