In the aftermath of the financial crisis, with periphery countries

in the European Union even more falling behind the core countries

economically, there have been quests for various kind of fiscal policies

in order to revert divergence. How these policies would unfold and

perform comparatively is largely unknown. We analyze four such stylized

policies in an agent-based macroeconomic model and study the

economic mechanisms behind their relative success. Our main findings

are that the core country sharing the debt burden of the periphery

country has almost no effect on the growth dynamics of that region,

fiscal transfers have a positive short and long run impact on per capita

consumption in the target region, and that technology oriented firm

subsidies have the strongest positive long run impact on competitiveness

of the periphery country at which they are targeted. The positive

effect of the technology oriented policy is reinforced if combined with

household transfers.