As the name implies, this option allows contemporaneous variables on the RHS.

The A0 matrix for contemporaneous variables is added as a second (optional)
output to the generated var_ar.m file. Note that for reduced-form VAR, this
matrix will be the identity.

Also, the user is now allowed to write the VAR models in a more flexible form:
the LHS must still be a single variable, but the RHS can be an arbitrary
expression (as long as it is linear, obviously). Internally, the preprocessor
now uses derivation to compute the coefficients of the AR and A0. This change
applies to both reduced-form and structural VAR models.

Ref. dynare#1785