diff --git a/matlab/dynare_estimation_1.m b/matlab/dynare_estimation_1.m
index d032d425b..903140876 100644
--- a/matlab/dynare_estimation_1.m
+++ b/matlab/dynare_estimation_1.m
@@ -178,6 +178,8 @@ end
 k2 = union(k',[dr.nstatic+1:dr.nstatic+dr.npred]');
 % Set restrict_state to postion of observed + state variables in expanded state vector.
 bayestopt_.restrict_var_list = k2;
+% set mf0 to positions of state variables in restricted state vector for likelihood computation.
+[junk,bayestopt_.mf0] = ismember([dr.nstatic+1:dr.nstatic+dr.npred]',k2);
 % Set mf1 to positions of observed variables in restricted state vector for likelihood computation.
 [junk,bayestopt_.mf1] = ismember(k,k2); 
 % Set mf2 to positions of observed variables in expanded state vector for filtering and smoothing.
diff --git a/matlab/dynare_estimation_init.m b/matlab/dynare_estimation_init.m
index 8be7e2f7a..d8a227f54 100644
--- a/matlab/dynare_estimation_init.m
+++ b/matlab/dynare_estimation_init.m
@@ -165,9 +165,12 @@ k2 = union(k',[dr.nstatic+1:dr.nstatic+dr.npred]');
 % set restrict_state to postion of observed + state variables
 % in expanded state vector
 bayestopt_.restrict_var_list = k2;
+% set mf0 to positions of state variables in restricted state vector
+% for likelihood computation.
+[junk,bayestopt_.mf0] = ismember([dr.nstatic+1:dr.nstatic+dr.npred]',k2);
 % set mf1 to positions of observed variables in restricted state vector
-% for likelihood computation
-[junk,bayestopt_.mf1] = ismember(k,k2); 
+% for likelihood computation.
+[junk,bayestopt_.mf1] = ismember(k,k2);
 % set mf2 to positions of observed variables in expanded state vector
 % for filtering and smoothing
 bayestopt_.mf2 	= k;