Another application of panel data methods is presented in the
paper by Claeys, Moreno, and Suriñach who study the crowding out
effects of increasing public debt in an empirical framework that accounts
for spatial spillovers, resulting from financial integration. The
empirical exercise uses data for both OECD and emerging market
economies for the years from 1990 to 2005 and applies test and estimation
methods developed to account for spatial dependence in
panel data. The main finding is that the crowing out effect is small
and that financial integration implies limited spillover via financial
markets. However, cross border spillover is estimated to be muchstronger among OECD countries, and particularly in EU Member
States. Emerging markets does not seem to be fully integrated in global
markets.