Building on time-series and cross-sectional properties of survey forecasts, this paper
documents a fruitful set of stylized facts of inflation expectations in Korea that a
macroeconomic theory must aim to explain. Despite the fact that survey measures of
inflation expectations have a similar central tendency, the amount of disagreement among
different types of economic agents appears to be substantial and shows no clear relationship
with relative price variability. The analysis of micro-level inflation expectations data
suggests that inflation uncertainty measured by dispersion of households expectations relies
not only on inflation regime but also on relative price variability. Each survey forecast has
the ability to explain the path of future inflation, but surprisingly with the wrong direction
from the rationality perspectives. Percentile regression analysis yields robust evidence of
bounded rationality for the households.