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New Demand Economics

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  • Fenghua Wen
  • Xieyu Yin
  • Chufu Wen

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.

Suggested Citation

  • Fenghua Wen & Xieyu Yin & Chufu Wen, 2025. "New Demand Economics," Papers 2510.17121, arXiv.org.
    • Handle: RePEc:arx:papers:2510.17121
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    References listed on IDEAS

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