Jackson Mejia

I am a PhD candidate in economics at MIT supported by the National Science Foundation. My academic research focuses on topics in public finance and macroeconomics.

I am on leave from MIT for the 2025-26 academic year to work at the Council of Economic Advisers. Next year, I will start as an assistant professor of economics in the School of Civic Leadership at UT Austin.

You may find my CV here.

Working Papers

Tax Policy and Capital Maintenance
[PDF] [SSRN]

Abstract: Firms adjust their capital stock through both investment in new capital and maintenance of existing capital. Omitting the maintenance decision creates two problems for standard models of tax reform. First, tax reforms reduce the cost of new investment but not maintenance, so the user cost of capital falls less than standard models imply. Second, elastic maintenance means depreciation rises when investment becomes cheaper, breaking the one-for-one mapping from investment to capital. I study the importance of these channels using freight railroad regulatory filings and corporate tax returns. The estimates imply the tax elasticities of capital, output and wages are about 70\% as large as implied by standard investment models, while investment elasticities only map into 2/3 as much capital. Applied to the 2017 Tax Cuts and Jobs Act, I find that it generated \$240B less corporate capital than conventional estimates.

Ramsey Alignment and the Postwar Tax System

[PDF] [SSRN]

Abstract: How far is the tax system from optimal, and how much does it matter? I develop a sufficient statistic that answers both questions: the cosine of the angle between the welfare and revenue gradients of the tax system. When the two are aligned, the system is optimal. I apply the framework to the postwar tax system, which shifted from drawing nearly half its revenue from corporate taxes to less than 15 percent. A small optimal reform in the 1950s would have increased welfare by 0.7% of GDP, but the system became Ramsey-aligned by the 1980s, leaving few gains from reform since then.

Inflation Expectations, Investment, and the Mundell-Tobin Financing Channel

[PDF] [SSRN] | with Giuditta Perinelli and Alex Tagliabracci

Abstract: Using a randomized information experiment on Italian firms, we show that the real investment response to inflation expectations depends systematically on the horizon of those expectations and on the pledgeability of capital. The tangible investment semi-elasticity with respect to expected inflation nearly doubles as the forecast horizon extends from six months to five years, and is roughly four times larger than the corresponding intangible response. These joint facts are difficult to reconcile with standard valuation or money illusion mechanisms but are consistent with a Mundell–Tobin financing channel in which firms lock in long-term nominal borrowing to fund tangible assets.

Tax Incidence with Endogenous Exit

[PDF] [SSRN]

Abstract: Measured tax incidence is biased when agents differentially select out of the observed tax base. When low-passthrough agents are more likely to exit, measured incidence overstates the true domestic burden. I show that correcting this bias requires only the exit share. Applying this framework to tariffs, where rerouting generates detectable exit, I find that a ten percentage point tariff rate increase raises exit probability by 10-30 percentage points. Correcting for selection implies that the incidence of tariffs on the U.S. during the 2018-19 trade war was 85\% as large as commonly supposed, and 75\% as large for intermediate business inputs. Existing tax provisions can discourage exit---corporate tax deductibility reduces the return to avoidance---but a major reform in 2017 weakened this channel, reducing tariff revenue by \$2-9 billion.

Smooth Panel Local Projections

[PDF] [SSRN] | R Package | R Vignette | Stata Code | with Jonathan S. Hartley

Abstract: This note extends smooth local projections to panel data and uses Monte Carlo methods to explore the bias and variance properties of smooth panel local projections (SPLP). SPLP allows researchers to penalize the impulse respond toward a polynomial, while standard local panel projections (PLP) are nonparametric but result in theoretically unappealing IRFs because they are too lumpy. Relative to PLP, SPLP has appealing properties in smaller samples.

Works in Progress

Reallocative Effects of Business Tax Reform

Abstract: Proponents of investment subsidies occasionally claim that subsidies increase the supply of used capital and relax financial constraints for young firms, resulting in a larger market for used capital and higher entry rates. However, that overlooks current law, under which increases in subsidies penalize the sale of used assets, so the usual intuition may reverse. To understand the competing incentives, I build an investment model featuring firms choosing whether to retain used assets or sell them to financially constrained firms. In partial equilibrium, higher subsidies reduce the supply of used assets. In general equilibrium, however, the reform alters firms’ retention decisions---by shifting the marginal product of retained capital through diminishing returns---which can either offset or amplify the direct reduction in used asset sales, yielding ambiguous effects on the equilibrium price, market size, and entry. Exploiting cross-industry variation in exposure to bonus depreciation, I test the model’s predictions using firm-level data from Compustat and industry measures of entry from the Business Dynamics Statistics. Increases in bonus reduce used capital sales and lower entry. These findings highlight an important trade-off in tax policy design, suggesting that incentives intended to spur investment may inadvertently hinder capital reallocation and firm turnover.

Optimal Nonlinear Taxation in the Sequence Space

Elite College Admissions and Group Preferences: Evidence from an Elite University

with Andrew C. Johnston and Nathaniel Winik

Publications

On Price Stability with a Job Guarantee (2022)

Contemporary Economic Policy | [PDF] [Published Version] | with Brian C. Albrecht

Abstract: Modern Money Theory (MMT) has risen to prominence in popular policy debates within macroeconomics. MMT economists argue for creating a job guarantee program, which they argue would generate price stability. Using a benchmark model of time consistency supplemented with a job guarantee, we conclude that once policymakers' incentives are considered, the job guarantee does nothing to help stabilize prices. We compare this program to a competing proposal to maintain price stability and full employment, NGDP targeting.

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