Can the digital economy promote fiscal effort?: Empirical evidence from Chinese cities

• Published in: Economic change and restructuring Vol. 56; no. 5; pp. 3501 - 3525
• Main Authors: Zhang, Wei-Liang, Song, Li-Ying, Ilyas, Muhammad
• Format: Journal Article
• Language: English
• Published: New York Springer US 01.10.2023; Springer Nature B.V
• Subjects: Development Economics; Digital economy; Economic Growth; Economic Policy; Economics; Economics and Finance; Global economy; Government spending; Heterogeneity; Infrastructure; International Economics; Macroeconomics/Monetary Economics//Financial Economics; Political Economy/Economic Systems; Revenue; Spillover effect; China; Fiscal effort; Panel regression analyses; Digital economy; Broadband China
• ISSN: 1573-9414; 1574-0277
• DOI: 10.1007/s10644-023-09540-6

Over the last few years, the governments’ fiscal revenue and expenditure have been significantly affected by the rapid growth of global digital economy. Despite the significant role that digital economy plays in improving the ability of the government to generate fiscal revenue, there is relatively little empirical evidence of this. Therefore, this study aims to reveal the impact of digital economy on the urban fiscal effort of China by analyzing the data recorded from 2011 to 2019. According to the empirical findings, digital economy can significantly improve the level of fiscal effort. Meanwhile, digital economy has a significant nonlinear effect on fiscal effort. As suggested by the results of expansion analysis, the effect of digital economy on fiscal effort shows significant regional heterogeneity and the spatial spillover effect is positive. Based on the findings of this study, it is recommended to strengthen the construction of digital infrastructure, optimize the practice of fiscal revenue management under the context of digital economy, and improve the governments’ fiscal situation by paying attention to the coordinated development of digital economy among various regions.