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This research investigates homogeneity in the transposition of European Directives using as an example the EU policy on tobaccos regulated by Directive 2011/64. We analyse the effect of excise duties on tobacco consumption in Europe from 2002 to 2017 using an Artificial Intelligence counterfactual strategy. To our knowledge, this the first time that this AI strategie has been used in the economic analysis of law. Our results show that countries have different responses to changes in prices or taxation on tobacco. The lack of homogeneity across countries creates distortions and frontier effects and shows the need of harmonization. [ABSTRACT FROM AUTHOR]

Abstract: In this paper, we explore whether higher corporate tax rates, because they lower the after‐tax returns to productivity‐enhancing investments, reduce the speed with which small firms converge to the productivity frontier. Using data for 11 European countries, we find evidence that their productivity catch‐up is slower when the statutory corporate tax rates are higher. In contrast, we find that large firms are instead affected by effective marginal rates. Using the reduced‐form model of productivity convergence of Griffith et al. (2009, Journal of Regional Science 49, 689–720), our results are robust to a host of robustness checks and a natural experiment that exploits the 2001 German tax reforms. [ABSTRACT FROM AUTHOR]