Market uncertainty developments and the minerals industry

Raputsoane, Leroi (2025): Market uncertainty developments and the minerals industry.

Abstract

This paper analyses the reaction of the minerals industry to market uncertainty developments in South Africa. This is achieved by augmenting a Taylor1993 rule type central bank monetary policy reaction function with the Chicago Board Options Exchange's (CBOE's) Volatility Index (VIX), or market uncertainty, index. The empirical results provide evidence of a statistically significant effect of an increase in market uncertainty on output of the minerals industry, which decreases and bottoms out after 3 months, where this effect is statistically significant up to 6 months. The results further show that following an increase in output of the minerals industry, the market uncertainty index decrease slightly and bottoms out after 2 months, with a statistically significant effect up to 2 months, which indicates a weak feedback effect between market uncertainty and output of the minerals industry. Market uncertainty is, thus, important economic activity, hence policymakers should continue to monitor the developments in market uncertainty to support economic activity as well as the minerals industry.

• Item Type: MPRA Paper
• Language: English
• Keywords: Market uncertainty, Minerals industry, Economic cycles
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C10 - General; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E50 - General; G - Financial Economics > G1 - General Financial Markets > G10 - General; L - Industrial Organization > L7 - Industry Studies: Primary Products and Construction > L70 - General

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