Of the various factors, two seem to be most important. The first factor was the difference in the economic and price situation immediately before the crises as well as the policy response. Just before the first oil crisis, there was an economic boom stemming partly from the government's plan for "remodeling the Japanese archipelago."
The economy was overheated and the financial environment was overly accommodative, having increased the inflation expectations of households and firms. In fact, the rate of annual wage increases exceeded 20 percent in 1973. Against this background, a surge in crude oil prices increased inflation expectations further, making matters even worse.