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General-Purpose Technology and Speculative Bubble Detection

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  • Haiqiang Chen
  • Li Chen
  • Difang Huang
  • Yuexin Li
  • Zhengjun Zhang

Abstract

We show that the leading bubble test suffers severe size distortion when fundamentals incorporate general-purpose technology adoption. Embedding a hump-shaped technology shock in the Campbell-Shiller present-value model, we prove that the fundamental price becomes locally explosive during adoption, contaminating the test's limit distribution with a non-centrality parameter proportional to the shock's peak. We propose a fundamental-versus-speculative decomposition that projects prices onto observable technology proxies and applies the test to the residual. Empirically, the decomposition eliminates evidence of speculation in the 2020-2025 AI rally while confirming a speculative peak confined to December 1999-March 2000 in the dot-com episode.

Suggested Citation

  • Haiqiang Chen & Li Chen & Difang Huang & Yuexin Li & Zhengjun Zhang, 2026. "General-Purpose Technology and Speculative Bubble Detection," Papers 2604.25826, arXiv.org, revised May 2026.
    • Handle: RePEc:arx:papers:2604.25826
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    References listed on IDEAS

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