To begin with, the particular method that Friedman chose to implement
the idea of permanent income for empirical aggregate time series purposes,
which were the ones that mattered for macro-economics and hence attracted
most of the attention, considerably lessened the impact of his work. In this
context he measured it as a geometrically declining weighted average of current
49
and past aggregate income (multiplied up by an adjustment factor to allow for
the fact that such a technique shifted the mean of the series back in time, and
hence, given economic growth, would understate its current value in a growing
economy.)22 Specifically, with b< 1, and ignoring this growth adjustment for
simplicity, permanent income became