State governments receive an exogenous tax windfall whenever their residents win a multi-state lottery. These lottery tax windfalls are counter-cyclical but occur during a range of economic conditions. Therefore, lottery tax windfalls enable us to estimate the impact of fiscal policy on...

We find that consumption risk is lower in states that implement counter-cyclical fiscal policies. Moreover, firms whose investor base are concentrated in counter-cyclical states have lower stock returns, along with firms that relocate their headquarters to a counter-cyclical state. Therefore,...