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at least cecchetti and ehrmann find that the fed ’ s revealed inflation aversion is now as high as that of the formal inflation targeting countries. given this strong inflation aversion, ultimately there may be little difference between informal inflation targeting as practiced in the united states and flexible, forward - looking inflation targeting as practiced in many other countries around the world. that said, one could still ask the normative question of whether the united states should go to what i will call a more formal system of inflation targeting. such a system would have pluses and minuses. one potential plus is in credibility and transparency. even if the present - day pragmatic fed responds to exogenous rises in the growth of aggregate supply or drops in the non - inflationary rate of unemployment in a fully accommodative manner, inflation targeting may better communicate the strategy. for example, explicit inflation targeting statements may help to make it clear that the fed is really fighting inflation, not economic growth. but there are also potential disadvantages. economic circumstances have been good in the 1990s, when countries have gone over to inflation targeting, and it is worth repeating that inflation targeting is no panacea. it may not work well in the presence of negative supply shocks like those experienced throughout the world in the 1970s. moreover, there is a potential problem with inflation targeting even in good economic times. if forecasting inflation is difficult, even forward - looking inflation targeting central banks may respond to inflationary shocks too late to ward off inflation. although there are several ways to forecast inflation, none may be that reliable. on one side, many analysts use econometric models, but these may have intrinsic problems in periods of significant structural shifts. the very nature of such shocks is that they are not easy to predict or model. on the other side, one could imagine constructing leading indicators of inflation, but the experience until now is that not many of these are reliable either. one could also rely on market expectations of inflation, survey evidence, or other forecasts of inflation. but if models are not working well and there are not many reliable leading indicators, it is not clear how much information is contained in these other forecasts. without models or leading indicators, even forward - looking inflation targeting strategies may not work as well as advertised. conclusion inflation targeting has many things going for it. this strategy of conducting monetary policy has been widely adopted around the world, and it has seemed to be successful in lowering