diff --git a/matlab/ms-sbvar/initialize_ms_sbvar_options.m b/matlab/ms-sbvar/initialize_ms_sbvar_options.m
index 77cfd66dd..be8a8f423 100644
--- a/matlab/ms-sbvar/initialize_ms_sbvar_options.m
+++ b/matlab/ms-sbvar/initialize_ms_sbvar_options.m
@@ -60,6 +60,7 @@ options_.ms.bayesian_prior = 1;
 options_.ms.alpha = 1;
 options_.ms.beta = 1;
 options_.ms.gsig2_lmdm = 50^2;
+options_.ms.specification = 2;
 if isfield(options_.ms,'initial_year')
     options_.ms = rmfield(options_.ms,'initial_year');
 end
diff --git a/matlab/ms-sbvar/ms_sbvar_setup.m b/matlab/ms-sbvar/ms_sbvar_setup.m
index 4b80e3495..7132be7a2 100644
--- a/matlab/ms-sbvar/ms_sbvar_setup.m
+++ b/matlab/ms-sbvar/ms_sbvar_setup.m
@@ -358,6 +358,10 @@ nrows = 1;
 ncols = nvar;
 fn_fprintmatrix(fidForC, xM', nrows, ncols, indxFloat)
 
+%=== Specification
+fprintf(fidForC,'\n%s','//== Specification (0=default  1=Sims-Zha  2=Random Walk) ==//');
+fprintf(fidForC,'\n%d\n\n',options_.ms.specification);
+
 %=== Uiconst: nvar-by-1 cell.  In each cell, nvar-by-qi orthonormal basis for the null of the ith
 %           equation contemporaneous restriction matrix where qi is the number of free parameters.
 %           With this transformation, we have ai = Ui*bi or Ui'*ai = bi where ai is a vector
diff --git a/preprocessor/DynareBison.yy b/preprocessor/DynareBison.yy
index adada745a..f2e405e84 100644
--- a/preprocessor/DynareBison.yy
+++ b/preprocessor/DynareBison.yy
@@ -144,8 +144,8 @@ class ParsingDriver;
 /* end of GSA analysis*/
 %token FREQ INITIAL_YEAR INITIAL_SUBPERIOD FINAL_YEAR FINAL_SUBPERIOD DATA VLIST LOG_VAR PERCENT_VAR
 %token VLISTLOG VLISTPER
-%token RESTRICTIONS RESTRICTION_FNAME CROSS_RESTRICTIONS NLAGS CONTEMP_REDUCED_FORM REAL_PSEUDO_FORECAST 
-%token DUMMY_OBS NSTATES INDXSCALESSTATES NO_BAYESIAN_PRIOR
+%token RESTRICTIONS RESTRICTION_FNAME CROSS_RESTRICTIONS NLAGS CONTEMP_REDUCED_FORM REAL_PSEUDO_FORECAST NONE
+%token DUMMY_OBS NSTATES INDXSCALESSTATES NO_BAYESIAN_PRIOR SPECIFICATION SIMS_ZHA
 %token <string_val> ALPHA BETA ABAND NINV CMS NCMS CNUM
 %token GSIG2_LMDM Q_DIAG FLAT_PRIOR NCSK NSTD
 %token INDXPARR INDXOVR INDXAP APBAND INDXIMF IMFBAND INDXFORE FOREBAND INDXGFOREHAT INDXGIMFHAT
@@ -1630,6 +1630,7 @@ ms_estimation_option : o_coefficients_prior_hyperparameters
                      | o_alpha
                      | o_beta
                      | o_gsig2_lmdm
+                     | o_specification
                      | o_output_file_tag
                      | o_file_tag
                      | o_no_create_init
@@ -2025,6 +2026,11 @@ o_indxscalesstates : INDXSCALESSTATES EQUAL INT_NUMBER {driver.option_num("ms.in
 o_alpha : ALPHA EQUAL non_negative_number {driver.option_num("ms.alpha",$3); };
 o_beta : BETA EQUAL non_negative_number {driver.option_num("ms.beta",$3); };
 o_gsig2_lmdm : GSIG2_LMDM EQUAL INT_NUMBER {driver.option_num("ms.gsig2_lmdm",$3); };
+o_specification : SPECIFICATION EQUAL SIMS_ZHA
+                  {driver.option_num("ms.specification","1"); }
+                | SPECIFICATION EQUAL NONE
+                  {driver.option_num("ms.specification","0"); }
+                ;
 o_q_diag : Q_DIAG EQUAL non_negative_number {driver.option_num("ms.q_diag",$3); };
 o_flat_prior : FLAT_PRIOR EQUAL INT_NUMBER {driver.option_num("ms.flat_prior",$3); };
 o_ncsk : NCSK EQUAL INT_NUMBER {driver.option_num("ms.ncsk",$3); };
diff --git a/preprocessor/DynareFlex.ll b/preprocessor/DynareFlex.ll
index 74b5ef403..1a8f32f55 100644
--- a/preprocessor/DynareFlex.ll
+++ b/preprocessor/DynareFlex.ll
@@ -277,6 +277,9 @@ string eofbuff;
   return token::BETA;
 }
 <DYNARE_STATEMENT>gsig2_lmdm {return token::GSIG2_LMDM;}
+<DYNARE_STATEMENT>specification {return token::SPECIFICATION;}
+<DYNARE_STATEMENT>sims_zha {return token::SIMS_ZHA;}
+<DYNARE_STATEMENT>none {return token::NONE;}
 <DYNARE_STATEMENT>q_diag {return token::Q_DIAG;}
 <DYNARE_STATEMENT>flat_prior {return token::FLAT_PRIOR;}
 <DYNARE_STATEMENT>ncsk {return token::NCSK;}