<p>We use a quantitative heterogeneous agent model with nominal rigidities and unemployment risk to analyze the effectiveness of several fiscal policies in stabilizing a demand-driven recession. The model delivers empirically realistic distributions of marginal propensities to consume (<i>mpc</i>) and labor participation elasticities (<i>lpe</i>) and matches the cross-sectional incidence of unemployment risk over the business cycle. We consider three fiscal stabilization packages: (i) a transfer to all low-income households, (ii) an increase in unemployment benefits to unemployed households, and (iii) an increase in labor tax credits to low-income working households. The labor tax credit is the most effective package to attenuate the recession, as it targets both high-<i>mpc</i> and high-<i>lpe</i> households and thus jointly stimulates labor and consumption. This result holds despite the recession resulting in higher unemployment risk.</p>