The article explores the effects of a devaluation on an economy, focusing on how it impacts different types of businesses. The researchers found that a devaluation can have both positive and negative effects on output, depending on factors like net worth and interest rates. The overall impact of a devaluation is uncertain, but it could potentially lead to a contraction in the economy if domestic firms' net worth is negatively affected. Additionally, if the monetary authorities raise interest rates to stabilize the exchange rate, it could further worsen the contractionary effect on output.