Government Debt and Banking Solvency : An Empirical Analysis with Panel Data for Western World (2000-2007)

In the present paper an empirical analysis with panel data will point out that Government Debt as a percentage of GDP either reduces or lets unaffected Banking solvency. This “not clear” finding is attributed to the assumptions of the method of estimation. In fact, present paper raises also the question “what method of estimation should be regarded as the correct one.” The sample covers most western world. Data are taken from the World Bank and OECD. The elaboration of these panel data is made feasible by means of the Eviews software package. Present paper is an extension of author's previous papers