John A. Tatom examines the production function estimates that provide the underpinning for these arguments. The author shows that simply accounting for the influence of energy price movements on productivity and for the slowing trend rate of technological change in the typical production function framework reduces recent estimates of public capital's effect on private sector output by more than half. More important, Tatom argues, such findings are examples of “spurious regression bias,” where variables appear to be statistically significantly related but are not. He explains this statistical problem and shows how it applies to tests of the public capital hypothesis. When the private sector production function is appropriately estimated, Tatom explains, the public capital hypothesis is rejected; the public capital stock has no statistically significant effect on business sector output. The author concludes that the pace of public capital formation has played no role in accounting for movements in U.S. productivity.