Social Sciences in China (Chinese Edition)

No. 12, 2025

The Synergy of Fiscal and Monetary Policies in the Digital Age

(Abstract)

Jiang Tingfeng, Li Minghao and Tang Ke

In the digital era, the micro-foundation of fiscal and monetary policy coordination—price stickiness—is undergoing substantial transformation. Systematically assessing how these changes influence policy synergy is important both theoretically and practically. Drawing on extensive price data from online and offline markets, this study measures price stickiness and incorporates these findings into a general equilibrium price adjustment model to examine the stimulative effects of fiscal and monetary policy coordination on consumption. Our findings reveal that as the share of online transactions increases and price stickiness weakens, monetary policy becomes less effective, while the efficacy of fiscal policies involving consumption subsidies increases. When these policies are coordinated, their stimulative effects on consumption increase significantly. Furthermore, because degrees of price stickiness vary across sectors, the synergy between subsidies and monetary policy also differs by sector. These findings offer valuable insights for leveraging big data and AI technologies in macroeconomic policymaking, incorporating online price dynamics into inflation measurement and monetary policy frameworks, and enhancing fiscal and monetary coordination through sector-specific approaches.