Taylor rule of monetary policy impotant now

I had (6/05/2009) just a look at Wikipedia on the Taylor rule of monetary policy. I found it interesting, in more than one sense. Below is my comments on the Wiki piece and the rule itself.

I am not sure all the interpretation is correct. For example, it is stated that specifying απ > 0 is equivalent to more than 1% raise of nominal interest rate for each percentage rise in inflation. If my understanding is correct, the above equation is linear between official rate and inflation rate. If so, then why are they disproportionate? Did I miss something here? Further, the statement about the relationship between inflation and real interest rate appears equally false.

I think that author might have meant απ > 1 in both cases. But that would contradict Taylor’s απ = 0.5 specification. However, is the απ = 0.5 specification Taylor’s?

But these are not really my concern here, because Taylor and people must have got the rule “right”, in the sense it should work at least theoretically.

My real concern is: if the official rate is near or equal to zero, how would the monetary authority do, assuming y is below potential output? In other words, when the so called liquidity trap occurs, how should monetary authority do?

An implication from the previous paragraph is what the authority should do now, given that the official rate is 0-0.25% and the economy is in a serious (great) recession.

So, it appears that the Taylor rule is only effective in normal times and it loses its usefulness when the economy is in a really bad situation. In the Wikipedia, the stagnation was mentioned, but it did not say anything about how this rule could be effective in that situation.

We still need more than this rule to survive in the real world where you will experience from time to time some “extreme scenarios” that lie beyond the bonds in which this rule may work.