"The paper explores the impact of international remittances on the Ethiopian economy and on the livelihoods and welfare of households. It uses macroeconomic data and data from the Ethiopian urban household survey. It was found that remittance shocks positively affect macroeconomic variables; the effect remained to be volatile in the very first periods after the shock. However, the impacts tend to sustain in the years after the fifth period. Moreover, through the positive (but inelastic) relationship between growth and poverty, private remittance inflows have an important implication on poverty in Ethiopia. International remittances significantly reduced the poverty incidence among the urban households in the country. It was also found that women are more likely to use remittance more effectively than their male counterparts."