IMF Economic Review, Volumen 67, Issue 2, 2019, Pages 288-314
Identifier
dc.identifier.issn
2041417X
Identifier
dc.identifier.issn
20414161
Identifier
dc.identifier.other
10.1057/s41308-019-00080-6
Identifier
dc.identifier.uri
https://repositorio.uchile.cl/handle/2250/172561
Abstract
dc.description.abstract
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, with a one-standard-deviation increase in our capital controls index increasing spreads by up to 35 basis points. The effect of capital controls on inflows differs across firms and across countries; the effect is particularly strong for firms that face more restricted access to alternative sources of external financing. Our findings establish a novel channel through which capital controls affect economic outcomes.