diff --git a/matlab/bvar_forecast.m b/matlab/bvar_forecast.m
index 65a535c50..24f34673f 100644
--- a/matlab/bvar_forecast.m
+++ b/matlab/bvar_forecast.m
@@ -2,8 +2,6 @@ function bvar_forecast(nlags)
 
     global options_
     
-    nvar = size(options_.varobs,1);
-    
     options_ = set_default_option(options_, 'bvar_replic', 2000);
     if options_.forecast == 0
         error('bvar_forecast: you must specify "forecast" option')
@@ -23,12 +21,11 @@ function bvar_forecast(nlags)
     k = ny*nlags+nx;
     
     % Declaration of the companion matrix:
-    Companion_matrix = diag(ones(nvar*(nlags-1),1),-nvar);
+    Companion_matrix = diag(ones(ny*(nlags-1),1),-ny);
     
     p = 0;
     d = 0;
-    while d<=options_.bvar_replic  
-        d = d+1;
+    while d<=options_.bvar_replic
         
         Sigma = rand_inverse_wishart(ny, posterior.df, S_inv_upper_chol);
 
@@ -39,13 +36,13 @@ function bvar_forecast(nlags)
         Phi = rand_matrix_normal(k, ny, posterior.PhiHat, XXi_lower_chol, Sigma_lower_chol);
         
         % All the eigenvalues of the companion matrix have to be on or inside the unit circle
-        Companion_matrix(1:nvar,:) = Phi(1:nvar*nlags,:)'; 
+        Companion_matrix(1:ny,:) = Phi(1:ny*nlags,:)'; 
         test = (abs(eig(Companion_matrix)));
         if any(test>1.0000000000001)
             p = p+1;
-            d = d-1;
             continue
         end
+        d = d+1;
         
         % Without shocks
         lags_data = forecast_data.initval;