Arrow-Debrou model is a proof of the existence of general equilibrium. 100 years ago, Walras put forward the general equilibrium theory, but his mathematical proof was wrong. Kenneth j. arrow and gerard debreu gave a mathematical proof of the existence of general equilibrium in their famous paper "The Equilibrium Existence of Competitive Economy".

Second, the detailed explanation:

In the perfect Arrow-Debrou general equilibrium model, the fate of money is not so good:

(1) There is no stock market in this model, because stocks are not Arrow-Debrou commodities. The so-called Arrow-Debrou commodity means that this kind of commodity must be able to accurately describe the substance. "When the description is too detailed, it is difficult to further process and produce an imaginable configuration that can improve the satisfaction of economic actors, then such a commodity is called Arrow-Debru commodity." Arrow-Debrou model studies those configurations that can be obtained through commodity exchange at a certain point in time. The Arrow-Debrou model can't include stocks, because you can get extra goods without exchanging goods.

(2) Arrow-Debrou model does not have the problem of enterprise bankruptcy. Because the production and consumption behavior of all economic entities must meet the budget constraints, once they exceed the budget, they will be punished infinitely. This obviously cannot analyze the modern capitalist credit economy. In the credit economy, it is very common for enterprises or individuals to produce and consume mortgage loans, so bankruptcy due to changes in repayment ability can be found everywhere.

(3) Money has no practical function in this model. Although all the reasons for the existence of money in reality, such as transaction demand, preventive demand, value storage and pricing unit, have been considered in Arrow-Debrou model, money has no substantial impact on resource allocation. We can imagine a model to illustrate the role of money in the Arrow-Debrou model: on the zero day, every economic entity can borrow money from the central bank, and every day thereafter, he will be allowed to provide financing for purchases and payments exceeding his money stock, and he will be required to add the proceeds from the sale of goods to the original money stock. On the last day, he will be asked to return the borrowed money to the bank. If it cannot be repaid, it will be punished by infinite bankruptcy. In this model, money has no practical influence on the allocation of resources. So Hahn said, "In the Arrow-Debrou model, it is impossible to ask questions about money, because according to that structure, money has no function, so it does not need to exist."

Special note: The above information is compiled according to Baidu Encyclopedia.