Public expenditure and public debt

Public expenditure is what government spends: on administration, defence, education, health, infrastructure, subsidies and interest on past borrowing. Wagner's law observes that public spending grows faster than national income as economies develop (more complex economies demand more state functions). When spending exceeds revenue, government borrows, creating public debt. Worked example: if government spends 120, collects revenue 100, and pays interest 10 on existing debt, the fiscal deficit is 20, the primary deficit (excluding interest) is 10, and debt rises by 20 if the whole deficit is borrowed.