This paper develops an open economy aggregate supply function with New Classical characteristics. The informational context and in particular the signal extraction problem of agents in an open economy operating under alternative regimes of a fixed and flexible exchange
rate is explicitly analyzed. Within this framework the significance of
the role of the exchange rate as a pure aggregate contemporaneously observable variable in reducing the expectational errors of agents attempting to distinguish between aggregate and local demand shifts is examined.
', './data/jte/coversheet/cover_en.jpg'))