Research on the Impact of Industrial Digitalization on High-Quality Economic Development: Evidence from China

Abstract

This paper presents a New Keynesian dynamic stochastic general equilibrium model with price stickiness, employing macro-quarterly data and Bayesian estimation for parameter estimation. The study dissects the impact of industrial digitalization into three key components: total factor productivity shock, investment marginal efficiency shock, and capital-to-labor substitution shock. The paper then analyzes the mechanism through which industrial digitalization influences the high-quality development of the economy using impulse response analysis and historical variance decomposition. The result shows that: In terms of economic growth, all three types of shocks resulting from industrial digitalization contribute to output expansion, with the investment marginal efficiency shock rapidly boosting output in the short term. However, the technology shock has the most noticeable long-term effect on output growth. In the labor market, the investment marginal efficiency shock positively impacts employment and wages. The effects of the technology shock and capital-to-labor substitution shock on employment and wages first show suppression before enhancement. In the commodity market, the three shocks exert more pronounced effects in the medium and long term, bolstering investment and consumption to varying degrees. In light of these findings, policy recommendations include promoting the development of digital infrastructure, implementing proactive employment policies, offering robust industrial support for the digitalization of traditional enterprises, and fostering a favorable market environment.