diff --git a/matlab/dynare_estimation.m b/matlab/dynare_estimation.m
index 9b83dff71..4c8369a1b 100644
--- a/matlab/dynare_estimation.m
+++ b/matlab/dynare_estimation.m
@@ -55,6 +55,8 @@ options_ = set_default_option(options_,'kalman_algo',1);
 options_ = set_default_option(options_,'kalman_tol',10^(-12));
 options_ = set_default_option(options_,'posterior_mode_estimation',1);
 options_ = set_default_option(options_,'MaxNumberOfBytes',1e6);
+options_ = set_default_option(options_,'xls_sheet','');
+options_ = set_default_option(options_,'xls_range','');
 
 %% Add something to the parser ++>
 M_.dname = M_.fname; % The user should be able to choose another name
@@ -175,17 +177,11 @@ k = find(isnan(bayestopt_.jscale));
 bayestopt_.jscale(k) = options_.mh_jscale;
 
 %% Read and demean data 
-if exist(options_.datafile)
-  instr = options_.datafile;
-else
-  instr = ['load ' options_.datafile];
-end
-eval(instr);
-rawdata = [];
+rawdata = read_variables(options_.datafile,options_.varobs,[],options_.xls_sheet,options_.xls_range);
+
 k = [];
 k1 = [];
 for i=1:n_varobs
-  rawdata = [rawdata eval(deblank(options_.varobs(i,:)))];
   k = [k strmatch(deblank(options_.varobs(i,:)),M_.endo_names(dr.order_var,:), ...
 		  'exact')];
   k1 = [k1 strmatch(deblank(options_.varobs(i,:)),M_.endo_names, 'exact')];
diff --git a/matlab/dynare_m.exe b/matlab/dynare_m.exe
index bd8fff062..7f669242a 100755
Binary files a/matlab/dynare_m.exe and b/matlab/dynare_m.exe differ
diff --git a/matlab/read_variables.m b/matlab/read_variables.m
new file mode 100644
index 000000000..755219b58
--- /dev/null
+++ b/matlab/read_variables.m
@@ -0,0 +1,41 @@
+% Copyright (C) 2005 Michel Juillard
+%
+% all local variables have complicated names in order to avoid name
+% conflicts with possible user variable names
+
+function dyn_data_01=read_variables(file_name_01,var_names_01,dyn_data_01,xls_sheet,xls_range)
+  
+  dyn_size_01 = size(dyn_data_01,1);
+  var_size_01 = size(var_names_01,1);
+  if exist(file_name_01)
+    dyn_instr_01 = file_name_01;
+    eval(dyn_instr_01);
+    for dyn_i_01=1:var_size_01
+      dyn_tmp_01 = eval(var_names_01(dyn_i_01,:));
+      if length(dyn_tmp_01) > dyn_size_01 & dyn_size_01 > 0
+	error('data size is too large')
+      end
+      dyn_data_01(:,dyn_i_01) = dyn_tmp_01;
+    end
+  elseif exist([file_name_01 '.mat'])
+    s = load(file_name_01);
+    for dyn_i_01=1:var_size_01
+      dyn_tmp_01 = s.(var_names_01(dyn_i_01,:));
+      if length(dyn_tmp_01) > dyn_size_01 & dyn_size_01 > 0
+	error('data size is too large')
+      end
+      dyn_data_01(:,dyn_i_01) = dyn_tmp_01;
+    end
+  elseif exist([file_name_01 '.xls'])
+    [num,txt,raw] = xlsread(file_name_01,xls_sheet,xls_range);
+    for dyn_i_01=1:var_size_01
+      iv = strmatch(var_names_01(dyn_i_01,:),raw(1,:),'exact');
+      dyn_tmp_01 = [raw{2:end,iv}]';
+      if length(dyn_tmp_01) > dyn_size_01 & dyn_size_01 > 0
+	error('data size is too large')
+      end
+      dyn_data_01(:,dyn_i_01) = dyn_tmp_01;
+    end
+    
+  end
+