"Beyond EMU: Is there a logical integration sequence?"

Even before the EMU process is complete in 2002, there are already initiatives being suggested to further integrate the European Union, both from an economic and political perspective. Many of these initiatives focus on harmonization of, for example, indirect taxes or corporate taxes in the economic realm or in terms of creating an EU defense capability in the political realm. To date, the integration dynamic has been from a customs union to a common market and then to monetary union. This paper studies whether after EMU is successfully completed in fiscal integration should be the next logical step in economic arena, or should efforts be made to foster more integration in labor markets, for example. Also, the paper considers various scenarios as to the final outcome of EMU and asks whether the answer to these questions of integration sequencing depends on the final EMU configuration. In terms of analysis, the paper uses the historical path of development adopted by other federations, as well as theoretical considerations from both the economic and political science literature.