The Reconciliation of Micro and Macro Economics
It is suggested that the appropriate structure for the reconciliation of micro and macroeconomics is an inﬁnite horizon overlapping generations (OLG) model with many ﬁnitely lived natural persons and one inﬁnitely lived strategic player without preferences whose choice rule is determined by the periodic political choice of the ﬁnitely lived players who are alive and politically strategically active at the time of choice. This player may be interpreted as government. In the steps from the ﬁnite horizon general equilibrium (GE) model to the overlapping generations model (GGOLG) it is suggested that even without exogenous uncertainty, if economic eﬀiciency is to be attained it is logically and technologically necessary to introduce government, government money, credit, bankruptcy and inheritance conditions.
Shubik, Martin, "The Reconciliation of Micro and Macro Economics" (1989). Cowles Foundation Discussion Papers. 1159.