JOURNAL OF CONTEMPORARY FINANCE AND ECONOMICS ›› 2022, Vol. 0 ›› Issue (1): 33-50.

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The Impact of Development of Digital Economy on Local Fiscal Sustainability in China

DENG Da1, PAN Guangxi1, 2, LIN Xiaole2   

  1. 1. China University of Political Science and Law, Beijing 100089;
    2. Shandong University of Science and Technology, Tai'an 271019, China
  • Online:2022-01-15 Published:2023-12-14
  • Contact: PAN Guangxi, Ph.D. candidate of China University of Political Science and Law, lecturer of Shandong University of Science and Technology, mainly engaged in the research of industrial transformation, upgrading, and sustainable development. Email: panguangxi@sdust.edu.cn.
  • About author:DENG Da, Ph.D. in management, professor of China University of Political Science and Law, mainly engaged in the research of market economic theory and policy.LIN Xiaole, lecturer of Shandong University of Science and Technology, mainly engaged in the research of digital finance.

Abstract: The development of digital economy and the local fiscal sustainability are two important issues in the face of China's macroeconomic field. It is of great practical significance to study the impact of the development of digital economy on local fiscal sustainability. Based on the provincial panel data from 2011 to 2018, this paper first measures China's local fiscal sustainability index, and then uses the fixed effect model to empirically study the impact of development of digital economy on local fiscal sustainability. The results show that, in the whole country, there is a significant and stable positive correlation between the development of digital economy and the local fiscal sustainability. The results of a mediating effect test show that the development of digital economy can affect local fiscal sustainability through fiscal revenue. Therefore, it is necessary to further optimize and promote the market mechanism and the policy support system for the development of digital economy, and to accelerate the digital industrialization and industrial digitization to promote the development of digital economy. It is also necessary to promote the reform of the financial and tax management system, strengthen the application of digital frontier technology in financial and tax management, and implement digital comprehensive budget performance management system. In addition, it is necessary to do a good job on“increasing income and reducing expenditure,”while the performance supervision and management of financial expenditure funds should be strengthened.

Key words: digital economy, local public finance, fiscal sustainability, high quality development