 Geopolitical risk developments and the minerals industryMPRA Paper from University Library of Munich, Germany Abstract: This paper analyses the reaction of the minerals industry to geopolitical risk developments in South Africa. This is achieved by augmenting a Taylor1993 rule type central bank monetary policy reaction function with the indicator of geopolitical risk. The results provide evidence of a statistically significant effect of an increase in geopolitical risk on output of the minerals industry, which initially decreases and bottoms out after 5 months, followed by a slight recovery and another decrease, where output of the minerals industry bottoms out again after 13 months, the effect of which is statistically significant between 12 and 14 months. The results further show no statistically significant effect of output of the minerals industry on geopolitical risk implying a unidirectional nexus between these indicators. The results are consistent with the hypothesis that elevated geopolitical risk undermines cross national consumer, business and investor confidence, consequently culminating in depressed economic conditions. Geopolitical risk is important for economic activity, hence policymakers should monitor developments in geopolitical conditions to support economic growth as well as the minerals industry. Keywords: Geopolitical risk; 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:124375 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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