The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments.
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.