Effects of ICT and Energy Transition on Sustainable Fiscal Growth: Empirical Evidence from China

Abstract

It is crucial for sustainable growth policies and strategies, which are currently being used internationally, to balance the various aspects of development, including the economic, environmental, and social ones. There is currently broad agreement that energy transition and Information and communication technologies (ICT) offer fresh momentum for long-term sustainable fiscal growth. The main goal of the current research is to study the effects of energy transition and ICT on sustainable fiscal growth in China over 1995-2020 period. To empirically estimate the above mentioned nexus, the recently introduced Quantile Autoregressive Distributed Lag Model (QARDL) is applied. The study findings for long run indicate that energy transition impacts sustainable fiscal growth negatively over lower qauntiles and at extreme higher quantiles. However, the ICT is found to promote sustainable fiscal growth at all quantiles. The short run dynamics also indicate that current and previous values of ICT and energy transition have significant impact on sustainable fiscal growth. The Wald test of parameter constancy rejects the null hypothesis and shows that non linear and asymmetric impact is present between sustainable fiscal growth and ICT and energy transition in the short run and the long run. Test of Quantile Granger Causality reveals  bidirectional causal association between study variables. The study recommends the Chinese government and policy makers to adopt efficient policies to promote ICT use among all the sectors of the economy that can help in achieving sustainable fiscal growth.