https://macropaperwarehouse.com/authors/tomohide-mineyama/Tomohide MineyamaHugo -- gohugo.ioen-ushttps://macropaperwarehouse.com/papers/taylor-rule-deviations-across-horizons-a-practical-tool-for-monetary-policy/https://macropaperwarehouse.com/papers/taylor-rule-deviations-across-horizons-a-practical-tool-for-monetary-policy/<p><strong>Research Question</strong></p> <p>The paper addresses a fundamental limitation of the standard Taylor rule as a monetary policy stance gauge: the rule is defined solely for the overnight federal funds rate (FFR) and cannot assess stance across the maturity spectrum of the yield curve. This limitation becomes acute when the FFR hits its effective lower bound (ELB) and the Federal Reserve resorts to unconventional monetary policy (UMP) instruments—quantitative easing and forward guidance—that are explicitly intended to influence longer maturities. The authors ask: can the Taylor rule idea be extended across the yield curve horizon to produce a maturity-specific monetary policy stance measure that remains informative even during ELB episodes?</p>