Our study attempts to reduce the research gap on counter-cyclical fiscal policy effects across the Indian economy. We observe India’s asymmetric fiscal behaviour across low- and high-growth periods and finds that fiscal policy is an effective tool to stabilise macroeconomic fluctuations during crises. We observe a pro cyclical nature of output, private consumption, and investment in the short run with respect to the government's spending shocks, while counter cyclical behaviour prevails in the long run. The results argue for preemptive government spending stimulus during the recessionary periods of the economy to overcome the low-growth phase, while consolidating government spending during high-growth periods, have macro-stabilisation implications for the Indian economy in the long run.

How effective are subnational fiscal policies at creating jobs? While traditional arguments assign the stabilization function to the central government, states are often involved either through funds provided by the central government (grants) or through their use of their own revenue sources. Following a recent macroeconomic literature that has estimated “regional multipliers” (essentially a Keynesian multiplier for subnational regions) this paper follows and expands on this literature by estimating the impact of grants, rainy-day funds, and state deficits on state employment. The results show a significant multiplier for grants and rainy-day funds that varies according to the source of funds and whether the labor market is in a slack or boom situation. Estimates for the grant variable suggest that during high unemployment times additional grants will stimulate employment at a cost of about $55,000 per job.

We study how variation in the allocation mechanism of public demand shapes firm performance and aggregate productivity. Exploiting the quasi-random implementation of an efficient or lottery-like auction format in the Italian construction sector, we find that when the same amount of public resources is allocated through the efficient mechanism, recipient firms experience about 8% higher revenue growth within three years. The effect is strongest where contracting authorities exhibit greater screening capacity and in less competitive markets. Efficient allocation targets more productive firms, which subsequently secure a larger amount of future public resources. Simulations suggest that replacing lottery-like mechanisms with efficient ones could raise sectoral productivity by about 4%.

This paper develops an integrated framework that combines the EUROMOD microsimulation model with macro-economic models from the Tax Foundation to assess the short- and medium-term effects of tax and benefit reforms. We apply this approach to a Polish personal income tax reform proposal that eliminates the top tax bracket and increases the basic allowance. The reform reduces the effective tax burden on labour, leading to a projected increase in labour supply by 1.3% and a medium-run GDP gain of 1.4%. These macro-economic responses are fed back into the microsimulation framework through dynamic scoring, which reduces the estimated government revenue loss from 6.6% (static) to 5.4% of baseline revenues. The results highlight the value of combining micro-level distributional analysis with macro-level behavioural feedbacks to fully capture the fiscal, employment, and inequality implications of comprehensive tax reforms.