Patric Hendershott evaluates the investment sector of Evans’ macroeconometric model and discusses the implications of the composition of investment for productivity growth. Hendershott concludes that Evans’ treatment of nonresidential investment and residential investment does not represent an advance relative to conventional treatments. Hendershott also considers ways in which economic policy can affect economic growth by channeling investment into more productive uses. He notes that the surge in implicitly mandated investment in the last decade and the subsidy extended to owner-occupied housing have tended to divert investment from its most productive uses and, therefore, to lower the productivity associated with a given capital stock.