... rate, reduces the currency's value. What important to note here is that, by definition, devaluation is possible only under fixed exchange regime. In this work, we shall consider the effectiveness of devaluation for the economy. In particular, to models will be used to assess devaluation effectiveness: Monetary model and Mundell-Fleming model. In doing so, we will use two-country case. In the two-country case, the exchange rate can be increased in two ways. First, it may be raised due to the domestic government decision to decrease the price of domestic currency in terms of foreign currency. Home country authorities can do that simply by selling domestic money in exchange for foreign money. Second, it can be increased by foreign government decision, for whatever reason, to increase the price of their currency expressed in domestic money. For the reason of simplicity, in this work the reasons of devaluation are not considered. ...

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