A recent paper including some Fed economists proudly proclaimed that FRB/US had correctly predicted that there was some probability of an event like the Great Recession and hitting ZLB could happen.
My question is what did they do with that knowledge? I live in California. I am told that there is about a 1% chance of there being a bad earthquake that might affect my house, and that I should strengthen my house to deal with this probability 0.01 event. Most agree with taking those actions.
How did the Fed use this information to prepare for a similarly low probability but very bad event?