Eugenia Andreasen, Martin Schindler, and Patricio Valenzuela
INTERNATIONAL MONETARY FUND
Using a panel data set for international corporate bonds and capital account restrictions in advanced
and emerging economies, we show that restrictions on capital inflows produce a substantial and
economically meaningful increase in corporate bond spreads. A number of heterogeneities suggest that
the effect of capital controls on inflows is particularly strong for more financially constrained firms,
establishing a novel channel through which capital controls affect economic outcomes. By contrast,
we do not find a robust significant effect of restrictions on outflows.