The rapid rise of the digital economy has profoundly reshaped information flows and the dynamics of expectation formation, creating new challenges for monetary policy evaluation. The Lucas Critique stresses that policy effectiveness depends on how economic agents form expectations about policy rules. This paper investigates how digitalization affects the Lucas Critique by altering both expectation mechanisms and the coordination of anticipatory behaviors.

This paper constructs a theoretical framework that highlights three mechanisms—policy information feedback, data transmission speed, and platform network effects—through which the digital economy interacts with rational expectations and monetary policy. Using China’s macroeconomic time-series data and firm-level panel data, it applies nested regression techniques to identify both macro- and micro-level impacts. The empirical results show that the digital economy significantly reshapes expectation formation, making agent expectations more consistent with rational expectations and enhancing the predictability of policy rules. Moreover, by raising the rationality and guidability of expectations, digitalization weakens the Lucas Critique: Monetary policy exerts a stronger effect on firm investment through improved information feedback, faster data flows, and coordinated platform responses. This effect is context-dependent: In advanced stages of digitalization, agents can anticipate policy changes more accurately; while in times of high policy uncertainty, the digital economy helps stabilize the output effect of monetary policy. Finally, while the digital economy has a positive impact on household consumption, this effect arises mainly from income improvements rather than expectation or monetary transmission channels.

This paper makes the following contributions: First, it extends the Lucas Critique to the digital era by showing how expectation formation and coordination are reshaped by digital technologies. Second, it identifies a new transmission channel in which policy effectiveness depends not only on agent rationality but also on the “guidability” of expectations, thereby revising the applicability of the Lucas Critique. Third, it provides novel empirical evidence on the heterogeneous impact of digitalization across development stages and policy environments, offering more precise tools for evaluating monetary policy effectiveness in a rapidly digitalizing economy.