Polynomial cancellation coding (PCC) is a very effective technique that reduces the sensitivity of orthogonal frequency division multiplexing (OFDM) to frequency errors at the cost of reduced spectral efficiency. This paper investigates the effect of PCC on the fading characteristics of multipath channels and on the error performance OFDM in a two-path fading channels. Channel coding is employed for forward error correction (FEC). It is shown that PCC improves the error performance of OFDM. Moreover, the overall effect of PCC and the channel coding is taken into consideration while analyzing the spectral efficiency of OFDM.