Commodity and Financial Market Linkages: Granger Causality Insights from Rare Earths, Crude Oil, and Equities
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Abstract
The article begins with a comprehensive review of the literature, emphasising empirical evidence on the interdependencies between rare earth element returns and other financial and commodity variables. Subsequently, two econometric models are specified and estimated to identify causal relationships among the returns of selected rare earth elements, crude oil, and an index representing exposure to the broad equity market. The empirical analysis incorporates the interpretation of impulse response functions (IRFs) and forecast-error variance decomposition (FEVD), which are integral components of VAR-based modelling. Finally, the findings are synthesised and conclusions are presented.
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