Intermediary Effect of Digital Economy on Impact of the Fiscal Revenue and Expenditure Structure on Dual-Circulation Development Paradigm

Abstract

In the context of dual-circulation development paradigm and high-quality economic growth in full swing, it is crucial to adjust the structure of fiscal revenue and expenditure to drive the crowd intelligence-driven digital economy's development. From the perspectives of fiscal revenue and expenditure structure and market, this study examines the impact of fiscal and taxation policies on the digital economy in China based on the data from 2007 to 2020 (excluding 2021 and 2022 due to COVID-19). The results show that the digital economy's development is positively correlated with several factors, including the proportion of science and technology, financial supervision, energy conservation, environmental protection expenditure, and income tax revenue. Conversely, general public service expenditure, turnover tax, resource tax, and administrative fees have an unfavorable impact on the digital economy. Furthermore, mainly via their impact on the digital economy, general public services, financial regulatory expenditure, and turnover tax revenues indirectly affect the dual-circulation development paradigm. Among the different markets, the consumer market has the most significant impact. Our research provides policy implications for the government in China. In summary, the Chinese government should reduce the scale of general public service expenditure and turnover tax, increase financial supervision, environmental protection and energy conservation, as well as science and technology expenditure. Additionally, regional differences in fiscal revenue and expenditure structure should be considered, and the inter-regional policy intensity should be adjusted based on general macro measures.