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This paper argues that energy efficiency is a potent shield against oil price uncertainty in an increasingly interconnected world fraught with geopolitical tensions. By reducing dependence on oil, enhancing economic resilience, and improving energy security, energy efficiency measures offer multifaceted benefits for both national economies and global stability. Specifically, a wavelet coherence analysis is conducted to study the response of global energy efficiency to geopolitical oil price uncertainty. Quantile-on-quantile and quantile regressions are additionally employed to separate the impacts of various geopolitical oil price risk quantiles on the quantiles of energy efficiency. These methods are utilized in the examination of global time-series data covering the timeframe 2004:Q1–2020:Q4. The wavelet coherence outcomes indicate a positive correlation between geopolitical oil price uncertainty and energy efficiency, particularly during the energy crisis of the 2000s and the COVID-19 pandemic. The results also reveal that geopolitical oil price uncertainty leads to energy efficiency, indicating that an upsurge in geopolitical oil price uncertainty causes energy efficiency to increase. Moreover, the results from quantile-on-quantile and quantile regressions affirm the predominantly positive effects of geopolitical oil price uncertainty on global energy efficiency. Our conclusion therefore is that through strategic investments, innovative policies, and international collaborations relating to energy efficiency, nations can fortify themselves against the destabilizing effects of geopolitical conflicts on energy markets. This would ensure a more sustainable and secure energy future for all.

Green development is the inevitable requirement of high-quality development in the resource-based regions, and it is also the fundamental guarantee for realizing environmental sustainability in the resource-based regions. Based on the panel data of 242 cities in China from 2006 to 2019, this paper explores whether mineral resource abundance is a blessing or a curse for carbon emission intensity and whether fiscal policy plays an intermediary role. We draw the following conclusions: (1) The overall performance of mineral resources is a carbon curse effect, because the carbon curse effect of mineral resources is greater than the carbon blessing effect. (2) Mechanism analysis reveals that the decrease in fiscal pressure and the increase in fiscal dependence are the formation paths of carbon blessing and carbon curse, respectively. (3) Heterogeneity analysis shows that the occurrence and intensity of the carbon curse are related to the level of local foreign investment, government intervention, and industrial diversification. The research results explain the supplementary motivation of government quality and provide Chinese evidence for the transformation and upgrading of resource-based regions.

The global climate issue is becoming increasingly serious, and studying the energy transition (ET) has proven to be an effective solution to this problem. The essence of climate mitigation is to address the issue of ensuring the public health (pH) of human beings. Still, the definitions of ET in existing literature are inconsistent, and Many researches overlook the definitions of ET in official documents and discuss the relationship between ET and pH. Therefore, this research utilizes panel data from 107 countries over the period 2000–2020 to construct an energy transition indicator based on the definition from the World Economic Forum (WEF). It also examines the link between ET and pH using a two-way fixed effects regression. In the current turbulent international environment, this paper also investigates this link in the context of composite risk control (CRC), financial risk control (FRC), economic risk control (ERC), and political risk control (PRC). The results show that ET can significantly improve pH, a conclusion that remains significant after being subjected to a range of robustness tests. The study exploring the mechanism impact on the relationship between ET and pH shows that CRC, FRC, ERC, and PRC all strengthen the effect of ET on pH, and the mechanism effect varies considerably between high-income and low- and middle-income countries (LMICs); ET is more significantly affected by the mechanism in LMICs than in high-income countries. Furthermore, this paper illustrates that ET does not differ by gender in improving pH among infants, while there are gender differences in adults by using the instrumental variable regression and GMM regression to mitigate the endogenous and heteroscedasticity issue for heterogeneity test. The study in this paper can not only inspire policy researchers on which aspects to promote ET, but also provide a direction for improving pH.

Carbon emissions are a global issue, especially among manufacturers, and China is facing many problems to lower such pollutants due to its goal of attaining carbon neutrality. This research applies a mathematical model to achieve the desired goal of decreasing CO2with the innovation of carbon neutrality tools and by moving towards high quality under the load capacity factor (LCF). We adopt a simulation-based optimization approach at different carbon peaks and manipulate various scenarios in order to find the best decisions for carbon neutrality tools. The results indicate that the green innovation fund, CO2emission tax, and CO2emission cap have significant roles in maximizing LCF. First, the green innovation fund plays a crucial part in reducing carbon emissions. Second, a CO2emission tax allows manufacturers to produce less than the green innovation fund and CO2emission cap. Third, the CO2emission cap strategy conversely allows manufacturers to produce more than the CO2emission tax strategy. This study provides reference for policymakers to achieve carbon neutrality and for the government to determine the best carbon-neutral tools under carbon peak. Lastly, the findings help manufacturers maximize LCF and profit and clean up the environment.

The world’s largest food producer, China, is now facing increasing pressure to solve food security and is committed to forging new prospects for global food security and sustainable agricultural development. As food security is receiving greater attention, this research takes panel data from 31 provinces and cities in China from 2011–2020 to examine the spatial spillover effect of the digital economy on food security. The study conclusions are as follows. (1) Improvement of the digital economy significantly promotes the development of China’s food security. (2) The digital economy has an inhibitory effect on food security in local regions and promotes food security in neighboring regions. (3) Heterogeneity exists within the spatial spillover effects of the digital economy on food security, and such differences often vary based on the status of regional economic development, natural geographical location, and land function. Therefore, policy suggestions proposed herein cover three aspects: accelerating infrastructure investment and construction, improving the empowering capability of the digital economy, and implementing different digital economy strategies to better support food security in China.

Starting from Chinese A-listed firms’ loan announcements, this research creatively constructs a dynamic, variant-linkage, and more comprehensive banking network in China during 2007 and 2016. Exploiting techniques from the literature on complex networks, we find that China’s banking network exhibits more clustering, more coherence, higher centrality, and even more heterogeneity. Empirical results show that the above network features, especially the heterogeneity of the network, have a great impact on financial systemic risk. A network with higher clustering coefficient, higher coherence, lower centrality, and greater heterogeneity is associated with a lower financial systemic risk. A range of policy measures can be drawn from our results, including macro-prudential policy, increasing network stability, and applying surcharges for systemically important financial institutions so as to minimize financial systemic risk.

This research examines the role of corporate investment inefficiency and abnormal investment behaviors on the effectiveness of monetary policy in China’s transitional economy during 2001–2017. Using panel data regression models, we explore corporate investment inefficiency and its response to money supply and interest rates. We find that firms tend to overinvest and react abnormally to interest rates. Overall, the interest rate transmission mechanism is hindered and monetary policy becomes muddled. Our finding suggests that regulating the money supply or interest rates cannot help in coping with the dilemma between economic and financial stability until extensive financial reforms are made. Finally, we draw implications for overall financial reforms.

The financial industry has been affected by the rise of informational technology and is actively developing digital finance. The use of technology has become an alternative resolution to improve global financial inclusion. This research discusses whether the development of mobile payment systems promotes financial inclusion and improves green environment in 29 low- and middle-income countries in Asia from 2014 to 2018. We utilize the outstanding bank deposit ratio and bank loan ratio as measures of financial inclusion and three measures for mobile payment. This study considers green recovery under an education indicator that shows awareness about the implementation of green recovery technologies. We find that some amount from loans is also useful when spent on green recovery in the move towards a clean environment. The empirical investigation notes a significant impact from mobile payment to financial inclusion development with the effect from mobile payment to financial inclusion more critical for lower- than higher-income countries in the sample. The empirical findings offer concrete evidence to encourage mobile payment ecosystems through the cooperation of government, financial institutions, and technology companies. A few policy implications are presented at the end of the study.

Digital financial inclusion (DIFI) exerts vital influence on poverty alleviation in China, thus developing digital financial inclusion may provide new approaches to inclusive growth and create more possibilities for the sustainable development with extending the coverage and usage concerning financial services. This research explores how poverty alleviation is impacted by digital financial inclusion derived from the provincial data of China from 2011 to 2019. The results show that digital financial inclusion can make considerable contributions to poverty alleviation significantly. We conduct heterogeneity analysis with quantile regression conjointly, which reveals that digital financial inclusion has divergent effects on users with diverse poverty levels. The results of mediation regression demonstrate that the income level and income distribution play a vital role in poverty alleviation. Moreover, based on spatial Dubin model, digital financial inclusion enhances poverty alleviation with a spillover effect, which correlates with a “U” non-linear relation, laying a hidden danger of increasing poverty. Finally, we carry out IV regression to enhance the robust results, proving the reliability of this research’s basic conclusion.

This research applies the Data Envelopment Analysis-Slack Based Measure (DEA-SBM) model and Global Malmquist–Luenberger (GML) index to estimate the quality of economic growth (QEG) in 30 provinces of China during the period 2011–2019. The results are that both digital finance and QEG have significant temporal and spatial differentiation characteristics. Moreover, the regional disparities of digital finance show a significant decline, and the regional disparities of QEG exhibit an upward trend. In terms of research methods, the relational data analysis paradigm and the quadratic assignment procedure help examine the impact of various factors, including digital finance on the regional disparities in QEG. The findings cover the following four aspects. First, from the perspective of the full sample, the regional disparities of digital finance have a negative effect on the regional disparities of QEG. The influence of the narrowing regional disparities of digital finance on widening the regional disparities of QEG is realized by widening the regional disparities in technological progress. The regional disparities of the coverage breadth and usage depth of digital finance have a negative effect in the regional disparities of QEG. Among the factors, marketization is the primary factor affecting the regional disparities of the QEG. Second, during the ‘12th Five-Year’ and ‘13th Five-Year’ periods, the regional disparities of digital finance have played a negative role on the regional disparities of QEG, but the impact intensity is lower. Third, narrowing regional disparities of digital finance can expand regional disparities of QEG in the east and central regions. Finally, in terms of different years the role of digital finance in regional disparities of QEG demonstrates a downward trend. This study has important academic and practical significance for the sustainable development of China’s economy and has theoretical and practical implications for the formulation and implementation of digital finance related policies in the future. It also provides a basis for narrowing the regional disparities in QEG in China and for promoting regional coordinated development.

This research examines whether a destination’s national culture has a substantial effect on tourism development. It focuses on six national culture proportions of Hofstede (2010). To account for probable asymmetric and non-linear associations among factors, the study tests a quantile regression by utilizing panel data from 101 nations and finds that most national cultures are non-linearly and statistically significant in explaining diverse quantiles of international traveler arrivals and international tourism receipts, whereas they do not do so for travel and leisure industry returns. We show that masculinity and indulgence negatively affect traveler arrivals, while power distance positively affects traveler arrivals.

This research examines the impact of Hofstede’s six cultural dimensions on 122 countries’ green economy and finds strong evidence that individualism, uncertainty avoidance, and long-term orientation positively influences this special economy. By contrast, power distance, masculinity, and indulgence have negative and robust impact on all measures of a green economy. Legislating environmental regulations or focusing on green technologies can be harmful for a green economy in countries with high levels of individualism, power distance, and indulgence. In more masculine countries, green economies can be promoted through technology rather than regulation. Finally, we note that the level of economic and financial development influences the relationship between national culture and the green economy. The empirical evidence offers implications for governments, policy makers, and future researchers.

The goal of this study is to explore the causal relationship among economic growth, economic complexity and CO2emissions by using panel data of 95 countries for the period 1996–2015. A novel panel Granger approach proposed by Juodis et al. (2021) is adopted. Under this approach, we can explore the Granger causality in homogeneous or heterogeneous panels. To uncover the heterogeneous causal effects at different income levels, this study further divide the sample into three groups according to their annual income levels. Empirical results show that there are bi-directional causalities among economic growth, economic complexity and CO2emissions for all groups. However, the magnitudes of the effects are heterogeneous for different groups. As to low-income countries, economic complexity is positive and significant for CO2emissions, while CO2emissions are negative for economic complexity. Furthermore, there is a positive interaction between economic complexity and CO2emissions for middle-income countries. Regarding high-income countries, however, increasing economic complexity might effectively reduce CO2emissions, and CO2emissions can significantly increase economic complexity. Additionally, economic complexity will prominently decrease GDP in low-income countries. These findings are robust to different economic complexity indexes. Our results suggest that both developing and developed countries should set a reasonable CO2emissions target, and on this basis, maintain a good balance between economic complexity and CO2emissions.

This research intends to investigate whether the “bank capital channel” does exist, by examining the relationship between bank capital and liquidity creation through 35 Asian countries over the period 2001–2018 and contributes to the literature in several respects. First, this study confirms the existence of the “bank capital channel” and solves the puzzle between the “risk absorption” hypothesis and the “financial fragility-crowding out” hypothesis. Our results reveal that strongly-capitalized banks retain more liquid assets, but do not lend more. Second, we explore the role of liquidity on the effects of bank capital and lending. Third, this study investigates whether the effect of bank capital on lending differs depending upon the role of political risk. Higher political risk leads to a higher level of uncertainty and results in a decrease of liquidity creation; only properly-capitalized banks are able to increase their liquidity creation. Our robustness tests also reveal that the “risk absorption” effect remains for commercial banks and large banks. However, cooperative banks have a greater positive effect on the banking capital channel probably due to differences in capital requirements. We also consider the effects of concentration and a financial crisis and find that liquidity creation drops under higher competition and during a crisis period. Lastly, we discuss policy implications.

The purpose of this paper is to introduce the idea of shift-share analysis, where local inflation is decomposed into the national factor, structural stickiness (with sectoral and regional aspects), and a localized pricing power effect in order to gain a better understanding of the inflation dynamics. We apply price-level data in China as a dual economy, which has historically been separated into urban and rural areas. The results show that sectoral differences in inflation are the most important factor explaining inflation in China, while local pricing power must be seriously considered in many sectors in rural areas.

Information and communication technologies (ICTs) have transformed the travel and leisure sector worldwide, yet until now there are no studies presenting international evidence of the different impacts of ICTs (i.e., Internet usage, secure Internet servers, mobile cellular subscriptions, high-technology export, communications as well as computer, and fixed broadband subscriptions) on tourism development (i.e., international traveler arrivals, increased international tourism receipts, and travel and leisure sector returns) by considering countries with different tourism development processes (e.g., high or low tourism development quantile). It is possible that ICTs have diverse or non-linear impacts on countries undergoing varying tourism development processes. Using international data based on a new panel quantile approach, this research thus aims to explore whether ICTs affect tourism development and looks into the possible asymmetric and non-linear relationships among the many variables. Results show that increasing mobile cellular subscriptions, secure Internet servers, and fixed broadband subscriptions have greater positive effects on traveler arrivals. ICTs also asymmetrically and non-linearly influence tourism across different quantiles. Non-global financial sub-periods and developing nations gain benefits from ICTs’ establishment. Lastly, there are geographic differences in the ICTs-tourism nexus.

This paper proposes an extended Solow decomposition framework with a finite mixture model, which is incorporated to account for heterogeneous regimes. The model decomposes green economy into two different components, namely, green total factor productivity and factor endowment. Then, we reestimate the growth sources of green economy and especially the importance of energy consumption in China’s provincial industries over 2000-2015. The empirical results suggest that there are three green growth regimes across Chinese provinces for overall economy and different industries. Specifically, some provinces switch regime over time, while the others maintain the same regime. Furthermore, when controlling for regime heterogeneity, the contribution of factor endowment decreases and that of green total factor productivity increases. With respect to energy consumption, traditional methods overestimate its importance in the primary and tertiary industries and underestimate that in the secondary industry. In addition, the reliance of China’s overall economy and the secondary and tertiary industries on energy consumption decreases as economy develops.

AbstractThe purpose of this study is to examine the effect of the Severe Acute Respiratory Syndrome (S.A.R.S.) epidemic on the long-run relationship between China and four Asian stock markets. To this end, we first employ the advanced smooth time-varying cointegration model to investigate the existence of a time-varying cointegration relation among these markets and then employ the difference-in-differences approach to analyse whether or not the S.A.R.S. epidemic impacted the long-run relation between China and these four markets during the period 1998–2008, covering 5 years before and after the S.A.R.S. outbreak. Our results support the existence of a time-varying cointegration relation in the aggregate stock price indices, and that the S.A.R.S. epidemic did weaken the long-run relationship between China and the four markets. Therefore, stockholders and policy makers should be concerned about the influence of catastrophic epidemic diseases on the financial integration of stock market in Asia.

AbstractWe explore what firm and macroeconomic factors assisted Chinese firms to resist the global financial crisis. We find that firms with higher top ten shareholder ratios or firms that are older exhibited saliently higher performance during the crisis, but performed poorly during the non-crisis period. Firm size has a notably negative impact on firm performance. Firms audited by the Big Four accounting firms have a significantly negative correlation with performance. During the crisis, stock markets became less efficient in incorporating firm-specific information into stock prices, signifying that the determinants of firm performance vary across non-crisis and crisis periods.

This research mainly focuses on investigating the role of the interactions between cash flows, oil price uncertainty, and geopolitical risk on corporate cash holdings across 42 countries. We also investigate whether such interactions may differ across firm and country characteristics. The main results show that the interactions between cash flows interacting with oil price uncertainty and geopolitical risk have a positive correlation with corporate cash holdings. Additionally, the nexus between the interactions and corporate cash holdings is more prominent for financially constrained firms, firms located in highly competitive industries, or Asia and Europe. The main policy implication based on our findings is that policymakers should exercise caution and take into account the effect of the uncertainties of oil price movement and geopolitical risk when designing policies related to corporate decision makings.

AbstractInsurance and credit markets share some common roles in stimulating economic growth, whether they are complementary or not is worth researching further. Based on the generalized method of moments, this paper investigates the synergistic effects between insurance and credit markets on economic growth in Chinese different regions using an interaction term in the regression model. Moreover, to understand the different economic roles of life and nonlife insurance sectors, we include them into estimation model as well. The results indicate that total insurance and credit markets are substituted, life insurance and credit markets are substituted, and nonlife insurance and credit markets are complementary in the whole region. Specifically, the synergistic effects between insurance and credit markets on economic growth vary considerably across different regions. These findings offer several useful insights for policy-makers.

This paper investigates the impact of government ideology on energy efficiency using data for a panel of 23 OECD countries over the 1980–2013 period. With dynamic panel data method applied, our evidence suggests that government ideology is a significant determinant of energy efficiency. Specifically, we show that left-wing parties are associated with energy efficiency improvements. Overall, our results are robust to the two measures of energy efficiency variables, alternative measures of government ideology variables, using annual and 3-year averages of the data, the inclusion of economic and political variables, and to model specifications.

AbstractUnlike most previous works which commonly define globalization as a strict economic characteristic, using the overall globalization index and its three sub-dimensions – economic, social and political integrations to proxy openness, this paper examines the effect of globalization on economic growth associated with autocratic institutional in China, using the a two-step dynamic panel generalized method of moments technique in a panel of 30 provinces, municipalities and the autonomous regions over the period of 1970–2006. We find that different globalization indices have different impacts on regional economic growth. Also, autocracy may harm regional development, but these conclusions are very sensitive to different globalization variables specifications. Further, considering the interactive effects between globalization and economic growth, we show that in the period of higher global integration, the higher democracy (lower autocracy) may harm economic growth in the case of China. We emphasize that democracy is clearly not a necessary condition for the purpose of economic growth in China.

This research explores a new way to reduce carbon intensity based on the perspective of digital inclusive finance. Taking panel data of 277 cities in China from 2011 to 2017, we employ different econometric models to comprehensively analyze and demonstrate the impact of digital inclusive finance on carbon intensity. The results show that digital inclusive finance can directly reduce carbon intensity, and through optimizing the industrial structure and promoting green technology it can also affect carbon intensity. Next, we show that good technological environment, a certain economic scale, and openness are preconditions for this effect. According to the spatial Dubin model, digital inclusive finance has a spatial effect on carbon intensity, and the spillover boundary range is between 350km and 400km. Moreover, the results contend that the promulgation of green-credit policy is beneficial to cutting down carbon intensity. Lastly, we perform a series of robustness tests involving endogeneity, sample selection bias, adding control variables, and winsorizing at different quantile, which strengthen the reliability of the study’s basic conclusion.

This study examines the herding behavior of investors in the Pacific basin stock markets. We use herding behavior to explain some possible investment strategies and follow causality tests (Granger 1969, Hsu et al., 2011) find the U.S. stock market still have major influence among the Pacific basin stock markets. We create a new dummy variable about the rise (drop) of the U.S. stock return in succession for 3days, 4days and 5days. Furthermore, we analysis the Pacific basin stock markets herding activity within the U.S. stock market and tries to discover the possible investment strategy. This result may provide the investor another consultation.

Abstract: This paper examines the impact of changes in real oil prices on the real stock returns of G7 countries. In addition to investigating the asymmetric effect of oil price shocks on stock returns, we also examine the effect of the performances of stock markets themselves, which are relevant to firms’ strategies in the future. Although the responses of stock markets to oil price shocks are diverse among G7 countries, we present the inconsistent reflections of stock markets based on their performances. In many cases, quantile regression estimates are quite different from OLS models. These results carry crucial implications for the linkage between oil and stock markets. [Copyright &y& Elsevier]

Globalization is commonly defined as a strict economic path by most previous works, but it is really a fuzzy concept with unrestrained dimensions. While the ideological location of an incumbent political party is a powerful predictor of its policy position, the role of a political party in the globalization-growth nexus has never been fully empirically investigated. By applying Pedroni's panel cointegration technique instead of a time-series or traditional panel data approach, this paper aims to empirically re-examine the co-movement and the causal relationship among economic growth, the overall globalization index, and its three main dimensions—economic, social, as well as political integrations—by using panel data for 23 Organization for Economic Cooperation and Development (OECD) countries for 1970 to 2006. Certainly, the political party variable is taken into account as the advanced test is promoted, and we finally discover that all variables move together in the long run. Based on the results of the panel causality test, though the evidence of short-run causality is very weak, it does show long-run unidirectional causality running from the overall index of globalization, economic globalization, and social globalization to growth. Finally, the critical role of the political party is deeply discussed in relation with our results.

This paper applies panel unit root, panel cointegration, and panel causality techniques to re-examine the total energy and electricity demand functions of 25 selected OECD countries during the 1978-2004 period. The panel results indicate that total energy demand is income inelastic and price inelastic, whereas electricity demand is income elastic and price inelastic. Based on the results of the panel causality test, there are reciprocal causal relationships among real income, real energy price, and total energy consumption. Furthermore, a uni-directional causality runs from income and electricity price to electricity consumption. The results for the panel as a whole suggest that the demand for total energy and electricity in the OECD countries is driven largely by strong economic growth, while consumers are largely insensitive to price changes.

This article applies the dynamic panel generalized method of moments technique to reexamine the environmental Kuznets curve (EKC) hypothesis for carbon dioxide (CO2) emissions and asks two critical questions: “Does the global data set fit the EKC hypothesis?” and “Do different income levels or regions influence the results of the EKC?” We find evidence of the EKC hypothesis for CO2 emissions in a global data set, middle-income, and American and European countries, but not in other income levels and regions. Thus, the hypothesis that one size fits all cannot be supported for the EKC, and even more importantly, results, robustness checking, and implications emerge.

Abstract: This paper applies the newly developed panel cointegrated technique [R. Larsson, J. Lyhagen, M. Lothgren, Likelihood-based cointegration tests in heterogeneous panels, Econom. J. 4 (1) (2001) 109–142] that allows for multiple cointegrated relationships to empirically re-examine the long-run money demand function for six selected countries of the Gulf Cooperation Council (GCC) in 1979–2000. At the center of focus is a discussion on the regional money demand phenomena with challenges and potential benefits, because of these GCC member adoption this monetary integration policy. It is determined that there are at least two cointegrated relations in the four-dimensional vector error correction model for the variables of the real money balance, the real scale variable, the nominal interest rate, and the exchange rate. The coefficient restriction test is also conducted, and it substantiates that the full panel test significantly rejects the hypothesis of the quantity theory of money for the long-run elasticity of income equal to unity, and we are able to reject the null hypothesis when the semi-elasticities of the nominal interest rate and exchange rate are equal to zero. Some critical policy implications emerge from the results. [Copyright &y& Elsevier]

Abstract: Our paper differs from previous studies by examining the issue of whether regime changes have broken down the stability of the long-run relationships between tourism development and real GDP in Taiwan for the 1959–2003 period. We empirically investigate the co-movements and the causal relationships among real GDP, tourism development, and the real exchange rate in a multivariate model. We use two different tourism variables—international tourism receipts and number of international tourist arrivals. To employ the unit root tests and the cointegration tests allowing for a structural break, the empirical evidence clearly shows that the causality between tourism and economic growth is bi-directional. Lastly, the international and cross-strait political change, economic shocks, and the relaxing of some tourism control and policies would break down the stability of the relationships between tourism development and economic growth. Overall, we do find the structural breakpoints, and they look to match clearly with the corresponding critical economic, political, or tourist incidents. [Copyright &y& Elsevier]

Abstract: The motivation behind this paper is to re-investigate the stability of the long-run money demand function (MDF) in a non-linear cointegrating framework for G-7 countries. Previous studies on non-linearity in the MDF are only related to the short-run dynamics and assume that long-run cointegrating relations are linear, which according to economic theory need not be the case. Thus, we really need to focus on the variables in the long-run MDF and their determinants through the adoption of a cointegrating smooth transition regression (CSTR) test developed by [I. Choi, P. Saikkonen, Testing linearity in cointegrating smooth transition regressions, Economet. J. 7 (2004) 341–365]. The reason is due to this model being more general than the traditional STR model in that it may contain several transition functions and has more than a single transition variable. Our evidence demonstrates the existence of a non-linear cointegrating relationship, and as such several transition variables should be of more concern under the non-linear hypothesis. Overall, we propose more possibilities that will bring about the unstable phenomenon of the long-run MDF. [Copyright &y& Elsevier]