++++++++++++++++++++++++(posted 8771 days ago)Yes, other things equal--and those other things inclued the stock of money, the price level, and the liqidity preference of businesses and households--an increase in the propensity to save lowers income and production. The increase in savings reduces consumption spending, and investment spending cannot rise to compensate unless or until something happens to reduce the interest rate...
The empirical relevance of this, however, is not clear in today's world where central banks act aggressively and are constantly adjusting interest rates to try to keep production equal to potential output.
Brad DeLong