We study the coherence properties of an atom laser, which operates by extracting atoms from a gaseous Bose-Einstein condensate via a two-photon Raman process, by analysing a recent experiment (Hagley et al 1999 Phys. Rev. Lett. 83 3112). We obtain good agreement with the experimental data by solving the time-dependent Gross-Pitaevskii equation in three dimensions both numerically and with a Thomas-Fermi model. The coherence is strongly affected by the space-dependent phase developed by the condensate when the trapping potential is turned off.