This study aims to investigate the impact of digital government on the fiscal sustainability of local governments and to propose policy measures to enhance such sustainability.
Based on panel data from 188 prefecture-level cities in China spanning the period from 2013 to 2022, this study uses a two-way fixed effects model and related econometric methods to explore the influence of digital government on local fiscal sustainability from two dimensions: debt ratio and fiscal space.
The results reveal that digital government enhances fiscal sustainability primarily through two mechanisms: improving administrative efficiency and strengthening government integrity. These mechanisms effectively curb the growth of local government debt and expand fiscal space. Heterogeneity analysis further indicates that the debt-suppressing effect of digital government is more pronounced in regions with high reliance on land finance or foreign trade, whereas its effect on expanding fiscal space is relatively weaker in these regions.
This research offers both theoretical insights and practical implications for developing countries seeking to enhance local fiscal sustainability and promote long-term economic development.
