%0 Report
        %A Mehrotra, Santosh
%A Hassan, Shady
        %T The 'Despotic Leviathan' and Its Financial Architecture: How IMF Conditionalities Deepen Inequality
        %D 2025
        %8 2025 Dec
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 18350
        %U https://www.iza.org/publications/dp18350
        %X This paper examines how IMF policies contribute to the inequality in MENA, and to a Middle-Income Trap (MIT).  Developing a theory  expanding Acemoglu and Robinson’s “Narrow Corridor” framework, it shows how IMF conditions align domestic elite incentives with creditor interests through a principal-agent lens. Using 2020-2025 data, its analysis reveals IMF monetary policies create rent-seeking structures that institutionalize inequality and suppress growth. The paper identifies an “engineered r>g dynamic” as a quantifiable signature of this extraction, empirically verified in Egypt. It establishes a causal link between financial/monetary policy (interest rates, debt compounding) and the “Despotic Leviathan” state formation.
        %K political economy
%K domestic debt
%K inequality
%K IMF conditionality
%K state capture
%K Middle-Income Trap
%K Egypt