diff --git a/matlab/+mom/run.m b/matlab/+mom/run.m
index 3e5620308..897c0aa77 100644
--- a/matlab/+mom/run.m
+++ b/matlab/+mom/run.m
@@ -249,7 +249,7 @@ CheckPath('graphs',options_mom_.dirname);
 options_mom_.mom.compute_derivs = false; % flag to compute derivs in objective function (might change for GMM with either analytic_standard_errors or analytic_jacobian (dependent on optimizer))
 options_mom_.mom.vector_output = false;  % specifies whether the objective function returns a vector
 % decision rule
-oo_.dr = set_state_space(oo_.dr,M_,options_mom_); % get state-space representation
+oo_.dr = set_state_space(oo_.dr,M_); % get state-space representation
 oo_.mom.obs_var = []; % create index of observed variables in DR order
 for i = 1:options_mom_.obs_nbr
     oo_.mom.obs_var = [oo_.mom.obs_var; find(strcmp(options_mom_.varobs{i}, M_.endo_names(oo_.dr.order_var)))];
diff --git a/matlab/+osr/run.m b/matlab/+osr/run.m
index 457b6ee4d..6e20df0b0 100644
--- a/matlab/+osr/run.m
+++ b/matlab/+osr/run.m
@@ -105,7 +105,7 @@ if isfield(options_.osr,'maxit') || isfield(options_.osr,'tolf')
     end
 end
 
-oo_.dr = set_state_space(oo_.dr,M_,options_);
+oo_.dr = set_state_space(oo_.dr,M_);
 par_0 = M_.params(i_params);
 inv_order_var = oo_.dr.inv_order_var;
 
diff --git a/matlab/check.m b/matlab/check.m
index a7c7f7822..7ef9562ed 100644
--- a/matlab/check.m
+++ b/matlab/check.m
@@ -40,7 +40,7 @@ if isempty(options_.qz_criterium)
     options_.qz_criterium = 1+1e-6;
 end
 
-oo_.dr=set_state_space(oo_.dr,M_,options_);
+oo_.dr=set_state_space(oo_.dr,M_);
 
 [dr,info] = resol(1,M_,options_,oo_.dr ,oo_.steady_state, oo_.exo_steady_state, oo_.exo_det_steady_state);
 
diff --git a/matlab/cli/prior.m b/matlab/cli/prior.m
index 06e5e15a3..b2559cc0f 100644
--- a/matlab/cli/prior.m
+++ b/matlab/cli/prior.m
@@ -135,7 +135,7 @@ if ismember('moments', varargin) % Prior simulations (2nd order moments).
     check_model(Model);
     % Compute state space representation of the model.
     oo__ = oo_;
-    oo__.dr = set_state_space(oo__.dr, Model, options_);
+    oo__.dr = set_state_space(oo__.dr, Model);
     % Solve model
     [T,R,~,info,oo__.dr, Model.params] = dynare_resolve(Model , options_ , oo__.dr, oo__.steady_state, oo__.exo_steady_state, oo__.exo_det_steady_state,'restrict');
     if ~info(1)
diff --git a/matlab/discretionary_policy/discretionary_policy_1.m b/matlab/discretionary_policy/discretionary_policy_1.m
index fee2055ad..18d96c717 100644
--- a/matlab/discretionary_policy/discretionary_policy_1.m
+++ b/matlab/discretionary_policy/discretionary_policy_1.m
@@ -116,7 +116,7 @@ end
 
 %write back solution to dr
 dr.ys =ys;
-dr=set_state_space(dr,M_,options_);
+dr=set_state_space(dr,M_);
 T=H(dr.order_var,dr.order_var);
 dr.ghu=G(dr.order_var,:);
 if M_.maximum_endo_lag
diff --git a/matlab/dynare_estimation_init.m b/matlab/dynare_estimation_init.m
index 7c9d22ed5..d1518c891 100644
--- a/matlab/dynare_estimation_init.m
+++ b/matlab/dynare_estimation_init.m
@@ -268,7 +268,7 @@ else% Yes!
 end
 
 % Get informations about the variables of the model.
-dr = set_state_space(oo_.dr,M_,options_);
+dr = set_state_space(oo_.dr,M_);
 oo_.dr = dr;
 nstatic = M_.nstatic;          % Number of static variables.
 npred = M_.nspred;             % Number of predetermined variables.
diff --git a/matlab/ep/extended_path_initialization.m b/matlab/ep/extended_path_initialization.m
index 4417f7b5a..49cf971cd 100644
--- a/matlab/ep/extended_path_initialization.m
+++ b/matlab/ep/extended_path_initialization.m
@@ -77,7 +77,7 @@ DynareOptions.stack_solve_algo = ep.stack_solve_algo;
 dr = struct();
 if ep.init
     DynareOptions.order = 1;
-    DynareResults.dr=set_state_space(dr,DynareModel,DynareOptions);
+    DynareResults.dr=set_state_space(dr,DynareModel);
     [DynareResults.dr,Info,DynareModel.params] = resol(0,DynareModel,DynareOptions,DynareResults.dr,DynareResults.steady_state, DynareResults.exo_steady_state, DynareResults.exo_det_steady_state);
 end
 
@@ -103,7 +103,7 @@ end
 % hybrid correction
 pfm.hybrid_order = ep.stochastic.hybrid_order;
 if pfm.hybrid_order
-    DynareResults.dr = set_state_space(DynareResults.dr, DynareModel, DynareOptions);
+    DynareResults.dr = set_state_space(DynareResults.dr, DynareModel);
     options = DynareOptions;
     options.order = pfm.hybrid_order;
     [pfm.dr, DynareModel.params] = resol(0, DynareModel, options, DynareResults.dr, DynareResults.steady_state, DynareResults.exo_steady_state, DynareResults.exo_det_steady_state);
diff --git a/matlab/optimize_prior.m b/matlab/optimize_prior.m
index 748495701..cd03c734f 100644
--- a/matlab/optimize_prior.m
+++ b/matlab/optimize_prior.m
@@ -20,7 +20,7 @@ function optimize_prior(DynareOptions, ModelInfo, DynareResults, BayesInfo, Esti
 % along with Dynare.  If not, see <https://www.gnu.org/licenses/>.
 
 % Initialize to the prior mean
-DynareResults.dr = set_state_space(DynareResults.dr,ModelInfo,DynareOptions);
+DynareResults.dr = set_state_space(DynareResults.dr,ModelInfo);
 xparam1 = BayesInfo.p1;
 
 % Pertubation of the initial condition.
diff --git a/matlab/partial_information/dr1_PI.m b/matlab/partial_information/dr1_PI.m
index 387f7fe8d..dc62187cf 100644
--- a/matlab/partial_information/dr1_PI.m
+++ b/matlab/partial_information/dr1_PI.m
@@ -157,7 +157,7 @@ if options_.debug
     save([M_.dname filesep 'Output' filesep M_.fname '_debug.mat'],'jacobia_')
 end
 
-dr=set_state_space(dr,M_,options_);
+dr=set_state_space(dr,M_);
 kstate = dr.kstate;
 nstatic = M_.nstatic;
 nfwrd = M_.nfwrd;
diff --git a/matlab/perfect-foresight-models/det_cond_forecast.m b/matlab/perfect-foresight-models/det_cond_forecast.m
index dd73cfb3e..1c7ced5c9 100644
--- a/matlab/perfect-foresight-models/det_cond_forecast.m
+++ b/matlab/perfect-foresight-models/det_cond_forecast.m
@@ -45,7 +45,7 @@ end
 if ~isfield(oo_,'dr') || ~isfield(oo_.dr,'ghx')
     fprintf('computing the first order solution of the model as initial guess...');
     dr = struct();
-    oo_.dr=set_state_space(dr,M_,options_);
+    oo_.dr=set_state_space(dr,M_);
     options_.order = 1;
     [oo_.dr,Info,M_.params] = resol(0,M_,options_,oo_.dr ,oo_.steady_state, oo_.exo_steady_state, oo_.exo_det_steady_state);
     fprintf('done\n');
diff --git a/matlab/prior_sampler.m b/matlab/prior_sampler.m
index 23ffe5f37..172190ce7 100644
--- a/matlab/prior_sampler.m
+++ b/matlab/prior_sampler.m
@@ -83,7 +83,7 @@ sampled_prior_covariance  = zeros(NumberOfParameters,NumberOfParameters);
 file_line_number = 0;
 file_indx_number = 0;
 
-oo_.dr=set_state_space(oo_.dr,M_,options_);
+oo_.dr=set_state_space(oo_.dr,M_);
 
 hh_fig = dyn_waitbar(0,'Please wait. Prior sampler...');
 set(hh_fig,'Name','Prior sampler.');
diff --git a/matlab/set_state_space.m b/matlab/set_state_space.m
index e442a2c16..5e5de1da4 100644
--- a/matlab/set_state_space.m
+++ b/matlab/set_state_space.m
@@ -1,8 +1,9 @@
-function dr=set_state_space(dr,DynareModel,DynareOptions)
+function dr=set_state_space(dr,M_)
+% dr=set_state_space(dr,M_)
 % Write the state space representation of the reduced form solution.
 
 %@info:
-%! @deftypefn {Function File} {[@var{dr} =} set_state_space (@var{dr},@var{DynareModel},@var{DynareOptions})
+%! @deftypefn {Function File} {[@var{dr} =} set_state_space (@var{dr},@var{M_})
 %! @anchor{set_state_space}
 %! @sp 1
 %! Write the state space representation of the reduced form solution.
@@ -12,10 +13,8 @@ function dr=set_state_space(dr,DynareModel,DynareOptions)
 %! @table @ @var
 %! @item dr
 %! Matlab's structure describing decision and transition rules.
-%! @item DynareModel
+%! @item M_
 %! Matlab's structure describing the model (initialized by dynare, see @ref{M_})
-%! @item DynareOptions
-%! Matlab's structure describing the current options (initialized by dynare, see @ref{options_}).
 %! @end table
 %! @sp 2
 %! @strong{Outputs}
@@ -51,10 +50,10 @@ function dr=set_state_space(dr,DynareModel,DynareOptions)
 % You should have received a copy of the GNU General Public License
 % along with Dynare.  If not, see <https://www.gnu.org/licenses/>.
 
-max_lead = DynareModel.maximum_endo_lead;
-max_lag = DynareModel.maximum_endo_lag;
-endo_nbr = DynareModel.endo_nbr;
-lead_lag_incidence = DynareModel.lead_lag_incidence;
+max_lead = M_.maximum_endo_lead;
+max_lag = M_.maximum_endo_lag;
+endo_nbr = M_.endo_nbr;
+lead_lag_incidence = M_.lead_lag_incidence;
 klen = max_lag + max_lead + 1;
 
 fwrd_var = find(lead_lag_incidence(max_lag+2:end,:))';
diff --git a/matlab/simulated_moment_uncertainty.m b/matlab/simulated_moment_uncertainty.m
index 63a0dcefe..1b4ce0918 100644
--- a/matlab/simulated_moment_uncertainty.m
+++ b/matlab/simulated_moment_uncertainty.m
@@ -58,7 +58,7 @@ if M_.exo_nbr > 0
     oo_.exo_simul= ones(max(options_.periods,1) + M_.maximum_lag + M_.maximum_lead,1) * oo_.exo_steady_state';
 end
 
-oo_.dr=set_state_space(oo_.dr,M_,options_);
+oo_.dr=set_state_space(oo_.dr,M_);
 
 
 if options_.logged_steady_state %if steady state was previously logged, undo this
diff --git a/matlab/stoch_simul.m b/matlab/stoch_simul.m
index a43220abc..caf4aba07 100644
--- a/matlab/stoch_simul.m
+++ b/matlab/stoch_simul.m
@@ -103,7 +103,7 @@ end
 
 check_model(M_);
 
-oo_.dr=set_state_space(oo_.dr,M_,options_);
+oo_.dr=set_state_space(oo_.dr,M_);
 
 if PI_PCL_solver
     [oo_.dr, info] = PCL_resol(oo_.steady_state,0);
diff --git a/matlab/stochastic_solvers.m b/matlab/stochastic_solvers.m
index 3234681f7..7eb01dc88 100644
--- a/matlab/stochastic_solvers.m
+++ b/matlab/stochastic_solvers.m
@@ -87,7 +87,7 @@ end
 if options_.k_order_solver
     orig_order = options_.order;
     options_.order = local_order;
-    dr = set_state_space(dr,M_,options_);
+    dr = set_state_space(dr,M_);
     [dr,info] = k_order_pert(dr,M_,options_);
     options_.order = orig_order;
     return
diff --git a/preprocessor b/preprocessor
index 084372a31..16b063f66 160000
--- a/preprocessor
+++ b/preprocessor
@@ -1 +1 @@
-Subproject commit 084372a314a5f3081dc055ba83dd879947809576
+Subproject commit 16b063f666df679173e3da7f30ec1bff55755ddb