Version: September 2, 2004

g a dynamic ntries and the d from 1990 to 2003. The empirical results find supportive evidence of a contagion effect. By analyzing the correlation-coefficient series, this paper the Asian crisis. The first phase shows an increase in correlation (contagion) and the second phase shows continued high correlation (herding). Statistical ll as in the variance of the correlation coefficients, casting some doubt on the benefit of international portfolio