Introduction: Taking structure seriously -- Structure and its measurement in econometrics -- Theory, structure and models -- Two strands of demand analysis -- Trygve Haavelmo and measuring the structure of the consumption function -- Milton Friedman and the emergence of the permanent income...

The purpose of this paper is to investigate the evolution of MiltonFriedman's permanent income hypothesis from the 1940s to 1960s, andhow it became the paradigm of modern consumption theory. Modellingunobservables, such as permanent income and permanent consumption, isa long-standing issue in...