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Assessing the Digital Economy and its Carbon-Mitigation Effects: The Case of China

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Wang, Jianda, Kangyin Dong, Xiucheng Dong, and Farhad Taghizadeh‐Hesary. 2022. “Assessing the Digital Economy and Its Carbon-Mitigation Effects: The Case of China.” SSRN Scholarly Paper. Rochester, NY: Social Science Research Network (SSRN).

To investigate whether the digital economy mitigates carbon dioxide emissions (CO2), this study first constructs a comprehensive digital economy index, and then employs provincial panel data covering the period 2006-2017 in China. We then investigate the mediating effects. The results indicate that the digital economy indexes of the eastern coastal provinces are higher than those in other provinces in China. This study found that the digital economy negatively affects CO2 emissions; in other words, an increase in the digital economy index by 1% will cause a decrease in CO2 emissions by 0.886%. Moreover, according to the sub-indicators of the digital economy’s effects CO2 emissions, the infrastructure, innovation and application, and economic growth and jobs of the digital economy negatively affect CO2 emissions. However, the social impacts of the digital economy contribute significantly to an increase in CO2 emissions. In addition, the digital economy indirectly reduces CO2 emissions by expanding the economic scale of tertiary industry, reducing the proportion of coal consumption and promoting green technology innovation. Finally, we put forward several policy implications for policymakers.

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