The objective of this study is to examine .the magnitude of sect oral linkages and thernpotential impact of policy- induced changes on the Ethiopian economy. To, carry out this,rnsocial accounting matrix (SAM)-based multiplier is used. The social accounting matrixrnconsists of fifteen production activities. two factors of production (labor and capital),rnthree institutions, namely, rural households, urban households, and government. onerncombined capital account, and the rest of the world.rnThis study indicated that the direct interdependence of the Ethiopian economy is limited.rnWhen general equilibrium effects are taken into consideration, agriculture is found to bernsuperior, through income and consumption linkages, in terms of stimulating economicrngrowth in the country. Of the industrial sub sectors, food processing. metals, beverage,rnand textile have strong linkages with the rest of the economy.rnThe study pointed out that targeting rural areas is impo11ant to eliminate rural and urbanrnpoverty simultaneously. The study also showed that complete elimination of fertilizerrnsubsidy has brought a decline in sect oral output , household income. and private savings.rnThe study indicated that sect oral investment programmers, particularly investments inrnagriculture have stimulated sect oral output and household income. It also indicated thatrnincreasing coffee exports have substantial impacts on stimulating growth and householdrnII1comes.rnIt follows that to bring long-term development. emphasis should be directed towards therntransformation of the rural areas in general and agricultural sector in particular andrnselective promotion of industrial subsectors. It is also crucial to reconsider thernimplication of'fel1ilizer subsidy elimination.