Exploring Bubbles in the Digital Economy: The Case of China

This study identifies the cyclical boom-and-bust episodes in digital economy-related assets and determines whether bubbles exist in China's digital economy. The extant literature mainly focuses on tech or cryptocurrency bubbles and has not considered the digital economy. Therefore, we use data from March 22, 2017, to March 3, 2022, and employ the generalized supremum augmented Dickey–Fuller (GSADF) technique to capture the irrational prosperity in China's digital economy. The conclusion suggests the existence of five bubbles in China's digital economy, all accompanied by extreme fluctuations in related asset prices, which the asset-pricing model supports. Under the backdrop of the scientific and technological revolution and industrial transformation, this exploration offers meaningful suggestions for China to facilitate the sound development of the digital economy.