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arXiv · 2510.17121

New Demand Economics

Fenghua Wen·Xieyu Yin·Chufu Wen
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Abstract

We develop a theory of demand economics for an era of material abundance. The binding constraint on growth has shifted from insufficient aggregate demand to inadequate demand-tier upgrading. Our result is that, the new engine of growth lies in upgrading the demand hierarchy: higher-tier demands generate larger value-creation multipliers. The key mechanism is education-driven utility management. Education transforms the social utility function, raises the utility of higher-tier goods, and directs resources toward higher-value domains; this warrants a policy reorientation away from short-run aggregate stimulus toward education-centered, long-horizon investments in human capital. Methodologically, we build an estimable general-equilibrium framework.

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Fenghua Wen, Xieyu Yin, Chufu Wen. 2025-10-20. New Demand Economics. https://arxiv.org/abs/2510.17121

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