diff --git a/tests/example1_varexo_det.mod b/tests/example1_varexo_det.mod
index 70b247ac521845b95e6658410d8555af1a06cca3..f750707db4ddd84e5e0e23f7dddb9f8392f72f99 100644
--- a/tests/example1_varexo_det.mod
+++ b/tests/example1_varexo_det.mod
@@ -4,7 +4,7 @@ var y, c, k, a, h, b;
 varexo e,u;
 varexo_det ahat, bhat;
 
-parameters beta, rho, alpha, delta, theta, psi, tau;
+parameters beta, rho, rho2, alpha, delta, theta, psi, tau;
 
 alpha = 0.36;
 rho   = 0.95;
@@ -13,6 +13,7 @@ beta  = 0.99;
 delta = 0.025;
 psi   = 0;
 theta = 2.95;
+rho2 = -0.1;
 
 phi   = 0.1;
 
@@ -22,9 +23,9 @@ k = beta*(((exp(b)*c)/(exp(b(+1))*c(+1)))
     *(exp(b(+1))*alpha*y(+1)+(1-delta)*k));
 y = exp(a)*(k(-1)^alpha)*(h^(1-alpha));
 k = exp(b)*(y-c)+(1-delta)*k(-1);
-a = ahat+ rho*a(-1)+tau*b(-1) + e;
-b = bhat+ tau*a(-1)+rho*b(-1) + u;
-end;
+a = ahat + rho*a(-1) + rho2*a(-2) + tau*b(-1) + e;
+b = bhat + tau*a(-1) + rho*b(-1) + u;
+end; 
 
 initval;
 y = 1.08068253095672;