diff --git a/matlab/dynare_estimation_init.m b/matlab/dynare_estimation_init.m
index 39fc16778..ae66acca1 100644
--- a/matlab/dynare_estimation_init.m
+++ b/matlab/dynare_estimation_init.m
@@ -457,7 +457,7 @@ if ~isfield(options_,'nobs')
     options_.nobs = [];
 end
 
-dataset_ = initialize_dataset(options_.datafile,options_.varobs,options_.first_obs,options_.nobs,transformation,options_.prefilter,xls);
+dataset_ = initialize_dataset(options_.datafile,options_.varobs,options_.first_obs,options_.nobs,logged_data_flag,options_.prefilter,xls);
 
 options_.nobs = dataset_.info.ntobs;
 
diff --git a/matlab/utilities/dataset/initialize_dataset.m b/matlab/utilities/dataset/initialize_dataset.m
index 6037b71f7..6aa142578 100644
--- a/matlab/utilities/dataset/initialize_dataset.m
+++ b/matlab/utilities/dataset/initialize_dataset.m
@@ -1,4 +1,4 @@
-function dataset_ = initialize_dataset(datafile,varobs,first,nobs,transformation,prefilter,xls)
+function dataset_ = initialize_dataset(datafile,varobs,first,nobs,logged_data_flag,prefilter,xls)
 % Initializes a structure describing the dataset.
 
 % Copyright (C) 2011-2013 Dynare Team
@@ -18,8 +18,6 @@ function dataset_ = initialize_dataset(datafile,varobs,first,nobs,transformation
 % You should have received a copy of the GNU General Public License
 % along with Dynare.  If not, see <http://www.gnu.org/licenses/>.
 
-% Original author: stephane DOT adjemian AT univ DASH lemans DOT fr
-
 if isempty(datafile)
     error('Estimation:: You have to declare a dataset file!')
 end
@@ -61,11 +59,11 @@ if size(rawdata,1)~=dataset_.info.ntobs
 end
 rawdata = rawdata(first:(first+dataset_.info.ntobs-1),:);
 
-% Take the log (or anything else) of the variables if needed
-if isempty(transformation)
-    dataset_.rawdata = rawdata;
+% Take the log of the variables if needed
+if logged_data_flag
+    dataset_.rawdata = log(rawdata);
 else
-    dataset_.rawdata = arrayfun(transformation,rawdata);
+    dataset_.radata  = rawdata;
 end
 
 % Test if the observations are real numbers.