Phasor Measurement Units (PMUs) have enabled real-time power grid monitoring and control applications realizing an integrated power grid and communication system. The communication network formed by PMUs has strict latency requirements. If PMU measurements cannot reach the control centre within the latency bound, they will be invalid for calculation and may compromise the observability of the whole power grid as well as related applications. To address this issue, this study proposes a model to account for the power grid observability under communication constraints, where effective capacity is adopted to perform a cross-layer statistical analysis in the communication system. Based on this model, three algorithms are proposed for improving power grid observability, which are an observability redundancy algorithm, an observability sensitivity algorithm and an observability probability algorithm. These three algorithms aim at enhancing the power system observability via the optimal communication resource allocation for a given grid infrastructure. Case studies show that the proposed algorithms can improve the power system performance under constrained wireless communication resources.