diff --git a/matlab/utilities/general/isdiagonal.m b/matlab/utilities/general/isdiagonal.m
new file mode 100644
index 000000000..f76e43797
--- /dev/null
+++ b/matlab/utilities/general/isdiagonal.m
@@ -0,0 +1,64 @@
+function b = isdiagonal(A) % --*-- Unitary tests --*--
+
+% Copyright (C) 2014 Dynare Team
+%
+% This file is part of Dynare.
+%
+% Dynare is free software: you can redistribute it and/or modify
+% it under the terms of the GNU General Public License as published by
+% the Free Software Foundation, either version 3 of the License, or
+% (at your option) any later version.
+%
+% Dynare is distributed in the hope that it will be useful,
+% but WITHOUT ANY WARRANTY; without even the implied warranty of
+% MERCHANTABILITY or FITNESS FOR A PARTICULAR PURPOSE.  See the
+% GNU General Public License for more details.
+%
+% You should have received a copy of the GNU General Public License
+% along with Dynare.  If not, see <http://www.gnu.org/licenses/>.
+
+if isnumeric(A)
+    if isquare(A)
+        % Find non zero elements in matrix A...
+        [ir, ic] = find(A);
+        % If the non zero elements are on the diagonal, the corresponding elements
+        % in ir and ic (row and column numbers) should be equal.
+        b = isequal(ir, ic);
+    else
+        error('isdiagonal: Input must be a square matrix!')
+    end
+else
+    error('isdiagonal: Input must be numeric!')
+end
+
+%@test:1
+%$ A = zeros(3,3);
+%$ t = isdiagonal(A);
+%$ T = all(t);
+%@eof:1
+
+%@test:2
+%$ A = zeros(3,3); A(1,3) = 1;
+%$ t = ~isdiagonal(A);
+%$ T = all(t);
+%@eof:2
+
+%@test:3
+%$ A = randn(3,3);
+%$ t = ~isdiagonal(A);
+%$ T = all(t);
+%@eof:3
+
+%@test:4
+%$ A = diag(randn(3,1));
+%$ t = isdiagonal(A);
+%$ T = all(t);
+%@eof:4
+
+%@test:5
+%$ A = diag(randn(3,1)); A(1,1) = 0;
+%$ t = isdiagonal(A);
+%$ T = all(t);
+%@eof:5
+
+