Natural resources tax volatility and economic performance: Evaluating the role of digital economy

The existing literature lacks empirical nexus of natural resources tax (TNRT) volatility and economic performance. Also, the digital economy is currently a hot issue among researchers and policy-makers. Therefore, the current study investigates TNRT volatility and economic performance - while adopting the role of digital economy (DEE), financial development (FD), technological innovation (TI), research and development expenditures (RDE). This study examines 30 Chinese provinces covering the period from 2006 to 2017. Using the panel quantile regression, this study explores that TNRT volatility, DEE, FD, and TI significantly increase economic performance in all the quantiles (Q(0.25), Q(0.50), Q(0.75)) However, RDE is found positive and significant only in Q(0.25), Q(0.50), while insignificant in Q(0.75) The findings of quantile regression are robust, as confirmed by the panel dynamic ordinary least square (DOLS). Besides, the Dumitrescu and Hurlin (2012) Granger panel causality test unveil a bidirectional causal nexus between TNRT, FD, TI, RDE and economic performance, while no causal nexus is detected between DEE and economic performance. This study recommends adopting and enhancing the digital economy, financial development, technological innovation, and research and development.

Automated summary

The study found that the volatility of natural resources tax, digital economy, financial development, and technological innovation significantly enhance economic performance in all quantiles, while research and development expenditures have a positive impact in some quantiles. Recommendations include strengthening the digital economy, financial development, technological innovation, and research and development.