Abstract
Ethiopia has experienced sustained growth for several years and yet the rural areas of the country remain poor. It’s therefore important to understand what are the sources of risks and which coping strategies are adopted by rural households. Taking advantage of a detailed rural household panel and of a newly released historical drought indicator I focus on weather shocks and their transmission to consumption expenditures. This is the first step in quantifying the ability of households of insuring themselves. Further investigations are aimed at identifying heterogeneity of responses to shocks across the wealth (livestock) distribution.