In this report, we aim to develop a model for Korea's small open economy that includes the analysis of Korea's fiscal policy based on the Bayesian Dynamic Stochastic General Equilibrium(DSGE). It will be a medium-scale model consisting of an additional hypothesis to analyze fiscal policy. The model will be unlike most of the other models of monetary policy. Because we intend to develop a small open economy medium-scale Bayesian DSGE model in the context of the Korean economy, the model is based on researches done on the features of the DSGE model. Thus, the report put in order the preceding researches, which are standard models recognized worldwide, and refers to various models established in Korea. We believe that models previously devised in Korea were monetary policy-oriented, with the result that little effort has been made to introduce various aspects of fiscal policy. This report, therefore, features a small open economy model with strong financial factors. The EU and the US developed DSGE models highlighting rich fiscal policy in response to their increases in fiscal expenditures and accumulation of national debt in the wake of the global financial crisis. It is difficult to apply such large-scale economy models as those of the EU or the US to Korea, but this does not detract from the pressing need to develop a suitable small open economy model with strong financial factors for Korea.