diff --git a/tests/example1_model_block_declared_vars.mod b/tests/example1_model_block_declared_vars.mod
new file mode 100644
index 0000000000000000000000000000000000000000..7e5afef45c39c1377ee0714ec0035bd02de1efd6
--- /dev/null
+++ b/tests/example1_model_block_declared_vars.mod
@@ -0,0 +1,50 @@
+// Example 1 from Collard's guide to Dynare
+var c, a, h, b;
+
+verbatim;
+% I want these comments included in
+% example1.m 1999q1 1999y
+%
+var = 1;
+end;
+
+parameters beta, rho, alpha, delta, theta, psi, tau;
+
+alpha = 0.36;
+rho   = 0.95;
+tau   = 0.025;
+beta  = 0.99;
+delta = 0.025;
+psi   = 0;
+theta = 2.95;
+
+phi   = 0.1;
+
+model;
+c*theta*h^(1+psi)=(1-alpha)*y;
+k|e = beta*(((exp(b)*c)/(exp(b(+1))*c(+1)))
+    *(exp(b(+1))*alpha*y(+1)+(1-delta)*k));
+y|e = exp(a)*(k(-1)^alpha)*(h^(1-alpha));
+k = exp(b)*(y-c)+(1-delta)*k(-1);
+a = rho*a(-1)+tau*b(-1) + e|x;
+b = tau*a(-1)+rho*b(-1) + u|x;
+end;
+
+initval;
+y = 1.08068253095672;
+c = 0.80359242014163;
+h = 0.29175631001732;
+k = 11.08360443260358;
+a = 0;
+b = 0;
+e = 0;
+u = 0;
+end;
+
+shocks;
+var e; stderr 0.009;
+var u; stderr 0.009;
+var e, u = phi*0.009*0.009;
+end;
+
+stoch_simul;