Since the financial crash the effectiveness of monetary policy for inflation targeting has been increasingly questioned. Policy makers and academics are now recognizing that many sources of inflation are outside of the central bank’s influence, leading many to call for a more prominent role for fiscal policy in achieving price stability. They point to the fiscal authority’s capacity to tax and spend strategically to increase productive capacity in areas of the economy that are sensitive to inflation. A review of the literature indicates that new statistical approaches can form the basis for the identification of these inflation sensitive industries. While their application has so far been limited to informing the use of monetary policy, I propose to develop an analytical framework  by which to apply

this analysis to the formulation of a metric of inflation risk that can be practically used to appraise fiscal policy proposals.

In my research I will test the framework on two distinct case studies. The UK is one of the proposed economies to be analysed, providing insight into the behaviour of price response to government spending in a developed economy.