I am hoping for some tips on what I could do for a term paper in applied econometrics. We are running a 2sls where I want to use a firm's location as an IV. How can I go about justifying it is a valid instrument? More specifically, how would you suggest I can argue the exclusion restriction holds for my instrument. I am thinking of a verbal argument of about a page tops, since I have limited space left. Any suggestions would be greatly appreciated. Thank you.
PS: My endogenous variable is a dummy for whether the business owner is a member of a political party, and my outcome variable is a leverage ra