Fiscal consolidation is a strategy aimed at reducing fiscal deficits and the level of public debt. This essay explores the theoretical foundations of fiscal consolidation. The paper begins by explaining the concept of fiscal consolidation, suggests why fiscal consolidation is needed, and explains how it can be achieved. Considering the discussions among economists and fiscal policy makers related to the way of implementing the fiscal consolidation program, the paper provides an overview of opposing views based on the literature review. Then the effects of fiscal consolidation on the economy and society are analyzed, including its impact on economic growth, inflation, unemployment and social policy. The paper also summarizes criticisms and shortcomings of fiscal consolidation as a policy, including its procyclicality and social consequences. This paper provides essential insights into the policies, measures and effects that various fiscal consolidation plans have, and can serve as a useful basis for further research on this topic.

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