Abstract
The use of GDP as the main index of progress and welfare of a country has been the subject of a long debate among economists. Using and extending the savers-spenders theory, we analyse the theoretical relationship between GDP and the welfare of a society. This analysis is undertaken using several different overlap** generations models which all take into account the great heterogeneity of consumer behaviour observed in the data (different labour supply choices, different degrees of altruism and/or different degrees of impatience to consume). The results indicate that GDP (per capita) is often a relevant index and is always a decent social welfare indicator.
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