EMU endangered: In search for a cure

According to some preliminary evidence, EMU-member countries may have a har d time coping with asymmetric shocks. According to some scenarios, this may endanger the very existence of the EMU itself. The authors of this paper s eek a redress far the EMU until a time when the convergence of economic and legal structures eliminates the existing asymmetries. The authors consider the low flexibility of the labor force and relative price structures and c onclude that it may be required of economic policy to step in and help. The operational room of monetary policy to weigh the regional impacts is highl y limited and thus fiscal policy comes to the fore. However, the present EU budget is too small and the EU Growth and Stability Pact limit member stat es' fiscal policy.