diff --git a/matlab/ep_residuals.m b/matlab/ep_residuals.m
index 19b09389b..66593ae50 100644
--- a/matlab/ep_residuals.m
+++ b/matlab/ep_residuals.m
@@ -42,14 +42,19 @@ if isempty(k1)
     k1 = [maximum_lag:-1:1];
     k2 = dr.kstate(find(dr.kstate(:,2) <= maximum_lag+1),[1 2]);
     k2 = k2(:,1)+(maximum_lag+1-k2(:,2))*endo_nbr;
-    weight = 0.99;
+    weight = 0.0;
 end
 
+verbose = 0;
+
 % Copy the shocks in exo_simul.
 oo_.exo_simul(maximum_lag+1,ix) = exp(transpose(x));
 exo_simul = log(oo_.exo_simul);
 
 % Compute the initial solution path for the endogenous variables using a first order approximation.
+if verbose
+    disp('ep_residuals:: Set initial condition for endogenous variable paths.')
+end
 initial_path = oo_.endo_simul;
 for i = maximum_lag+1:size(oo_.exo_simul)
     tempx1 = oo_.endo_simul(dr.order_var,k1);
@@ -61,6 +66,11 @@ end
 oo_.endo_simul = weight*initial_path + (1-weight)*oo_.endo_simul;
 
 info = perfect_foresight_simulation(dr,steadystate);
+if verbose>1
+    info
+    info.iterations.errors
+end
+
 r = y-transpose(oo_.endo_simul(maximum_lag+1,iy));
 
 %(re)Set k1 (indices for the initial conditions)
diff --git a/matlab/reversed_extended_path.m b/matlab/reversed_extended_path.m
index f61f9643a..877db2574 100644
--- a/matlab/reversed_extended_path.m
+++ b/matlab/reversed_extended_path.m
@@ -73,7 +73,6 @@ for k=1:n
     iy_(k) = strmatch(controlled_variable_names{k},dataset.variables,'exact');
 end
 
-
 % Get indices of the control innovations in exo_simul.
 ix = NaN(n,1);
 for k=1:n
@@ -89,12 +88,19 @@ innovation_paths = zeros(n,T);
 % Initialization of the perfect foresight model solver.
 perfect_foresight_simulation();
 
+% Set options for fsolve.
+options = optimset('MaxIter',10000,'Display','Iter');
 
 %% Call fsolve recursively
 for t=1:T
     x0 = zeros(n,1);
-    y  = transpose(data(t,iy_));
-    [tmp,fval,exitflag] = fsolve('ep_residuals', x0, [], y, ix, iy, oo_.steady_state, oo_.dr, M_.maximum_lag, M_.endo_nbr);
+    y_target  = transpose(data(t,iy_));
+    total_variation = y_target-transpose(oo_.endo_simul(t+M_.maximum_lag,iy));
+    for i=1:100
+        [t,i]
+        y = transpose(oo_.endo_simul(t+M_.maximum_lag,iy)) + (i/100)*y_target 
+        [tmp,fval,exitflag] = fsolve('ep_residuals', x0, options, y, ix, iy, oo_.steady_state, oo_.dr, M_.maximum_lag, M_.endo_nbr);
+    end
     if exitflag==1
         innovation_paths(:,t) = tmp;
     end