We analyze the effects of foreign shocks to Korean economy through aglobal VAR model including USA, Euro area, Japan and China. For theidentification, we especially assume that countries except Korea have arecursive structure and that the financial variables may not instantly affect thereal variables. The Korean economy as a small open one is identified throughthe exogenous foreign variables and covariance restrictions for the structuralequation errors. The empirical analyses show that Korean economy is affectedby the China economy as well as the economy of United States. Finally,Korean economic variables showed some co-movements with the foreignfinancial and real variables.