 External demand developments and the minerals industryMPRA Paper from University Library of Munich, Germany Abstract: This paper analyses the reaction of the minerals industry to external demand developments in South Africa. This is achieved by augmenting a Taylor1993 rule type central bank monetary policy reaction function with an indicator of external demand. The empirical results provide evidence of a statistically significant effect of an increase in external demand on output of the minerals industry, which increases slightly and peaks out after 2 months following which it decreases and bottoms out after 5 months. The effect of the surprise increase in external demand on mining and quarrying output is statistically significant between 7 and 10 months. Output of the minerals industry, thus, does not conform to the classical theories of international trade, at least at business cycle frequencies, such as the Heckscher-Ohlin, or factor endowment, theory which emphasises specialisation in production of the most abundant factors. External demand is important for economic activity, hence policymakers should monitor the developments in external demand conditions to support economic growth and the minerals industry. Keywords: External demand; Minerals industry; Economic cycles (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:124372 Access Statistics for this paper More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC. |
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