diff --git a/matlab/thet2tau.m b/matlab/thet2tau.m
new file mode 100644
index 000000000..8b259a458
--- /dev/null
+++ b/matlab/thet2tau.m
@@ -0,0 +1,64 @@
+function tau = thet2tau(params, indx, indexo, flagmoments,mf,nlags,useautocorr)
+
+%
+% Copyright (C) 2010 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/>.
+
+global M_ oo_ options_
+
+if nargin==1,
+    indx = [1:M_.param_nbr];
+    indexo = [];
+end
+
+if nargin<4,
+    flagmoments=0;
+end
+if nargin<7 | isempty(useautocorr),
+    useautocorr=0;
+end
+
+M_.params(indx) = params(length(indexo)+1:end);
+if ~isempty(indexo)
+    M_.Sigma_e(indexo,indexo) = diag(params(1:length(indexo)).^2);
+end
+% [A(oo_.dr.order_var,oo_.dr.order_var),B(oo_.dr.order_var,:)]=dynare_resolve;
+[A,B]=dynare_resolve;
+if flagmoments==0,
+    tau = [oo_.dr.ys(oo_.dr.order_var); A(:); dyn_vech(B*M_.Sigma_e*B')];
+else
+    GAM =  lyapunov_symm(A,B*M_.Sigma_e*B',options_.qz_criterium,options_.lyapunov_complex_threshold);
+    k = find(abs(GAM) < 1e-12);
+    GAM(k) = 0;
+    if useautocorr,
+        sy = sqrt(diag(GAM));
+        sy = sy*sy';
+        sy0 = sy-diag(diag(sy))+eye(length(sy));
+        dum = GAM./sy0;
+        tau = dyn_vech(dum(mf,mf));
+    else
+        tau = dyn_vech(GAM(mf,mf));
+    end
+    for ii = 1:nlags
+        dum = A^(ii)*GAM;
+        if useautocorr,
+            dum = dum./sy;
+        end
+        tau = [tau;vec(dum(mf,mf))];
+    end
+    tau = [ oo_.dr.ys(oo_.dr.order_var(mf)); tau];
+end
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