his paper examines the implementation of monetary policy during the
interest rates targeting in a small-open economy (i.e. Malaysia) by
using an open-economy structural VAR (SVAR) study. It tests the effect
of foreign shocks upon domestic macroeconomic fluctuations and monetary
policy, and examines how effective monetary policy is in influencing
macroeconomic variables. The results show that during interest rates
targeting, monetary policy plays a significant role in affecting
macroeconomics variables. This finding suggests that monetary policy has
an important role as a stabilization policy in a small-open economy.
[ABSTRACT FROM AUTHOR]