Analyzing the Impact of Critical Mineral Price Shocks on Real Investment

This study investigates the dynamic effects of critical mineral price fluctuations-specifically those of copper, nickel, lithium, and rare earth elements-on Korean manufacturing investment.Using a Vector Autoregression (VAR) model, the analysis finds that although adjustment patterns vary by mineral, statistically significant effects on investment are limited.Variance decomposition shows that investment volatility is largely self-driven.Furthermore, causality tests indicate that mineral prices are exogenous and shaped by global macroeconomic factors rather than domestic investment.The findings suggest that price shocks act as indirect pressures, delaying investment decisions by amplifying uncertainty, rather than causing immediate reductions.Consequently, mineral risks should be interpreted through the lens of uncertainty management rather than exaggerated short-term impacts.