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my problem is the following: I have a panel (from 1999 to 2005,
observations are 410) over municipal expenditure data and several controls
and i want to run a difference in difference estimation on the expenditure
impacts of a amalgamation reform taken place between 2000 and 2003. Beside the municipal mergers also a change of their administrative form changed partially in the sample of municipalities. I have binary dummies for the respective years of administrative change as well as cumulated dummies which are set to the same values for all years of the sample. How can i account for the administrative change in my Diff in Diff (both pooled OLS and fixed effects) setting, which has the main purpose of analzing the fiscal effects of amalgamations. Are IVs a possibility or are theyre better options?
Any help would be appreciated.