On your computer try creating an empty text file with the name DO_FACTORY_RESTORE without any file type ending. With your kindle connected to your computer, put this file onto the Kindle. Don't put into any inner folder. Eject the kindle from the computer. Then hold the power button long enough to shut the kindle down, then turn it back on. This should do a full factory reset. A factory reset takes several minutes and looks like it is quit and restarting several times before it finishes.
I just tested this on a Kindle Paperwhite 2 and it worked.
Note: this will deregister the kindle and remove all content. So you will have to register again, and download content from the cloudl
This might not fix the response of the touch digitizer, but it the next level of things to try.
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