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Economic causation nexus and the minerals industry

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  • Raputsoane, Leroi

Abstract

This paper analyses the causality nexus between the minerals industry and selected macroeconomic indicators in South Africa. This is achieved by augmenting a Taylor1993 rule type central bank monetary policy reaction function with selected macroeconomic indicators and comparing the causality between the minerals industry and these macroeconomic indicators. The results provide evidence of a statistically significant unidirectional causality from commodity prices, foreign exchange rate and geopolitical risk to output of the minerals industry. The results have also shown a unidirectional causality from output of the minerals industry and government expenditure, or fiscal policy stance. The results further show a bidirectional causality between output of the minerals industry and monetary policy interest rate, foreign direct investment, financial market, business confidence, market uncertainty as well as external, or foreign, demand. The results, however, do not show the absence of causality, or causation, between output of the minerals industry and the selected macroeconomic indicators. Macroeconomic indicators are important for economic activity, hence policymakers should monitor developments in macroeconomic events to support economic growth as well as the minerals industry.

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  • Raputsoane, Leroi, 2025. "Economic causation nexus and the minerals industry," MPRA Paper 124711, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:124711
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    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • L72 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Other Nonrenewable Resources

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