| Summary: | The issue of welfare is a widespread issue that any country in the world would love to achieve. However, in Ethiopia, many societies are living in poverty because of high food prices emanating from fragile agricultural productivity and exchange rate devaluation. The aim of this study is to investigate the effects of agricultural factors productivity, food prices, and exchange rates on household welfare in Ethiopia. Based on the stochastic process of the variables, the autoregressive distributed lag model has been employed. The result of the model revealed that agricultural land productivity in the introduction episode depresses welfare and, latterly, it optimistically improves welfare. Nevertheless, labor productivity in agriculture has a negative impact on welfare. Furthermore, exchange rate depreciation and food price increases in Ethiopia endanger welfare by eroding purchasers' purchasing power and amplifying the divergence of demand and supply in the economy. To improve the welfare of society, the government and society should increase the productive capacity of domestic firms and the agriculture sector to the extent that offsets the exchange rate effects on welfare.
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