Dear Stata users,
I have one question, which is probably more an econometric question than a Stata question.
I have a panel dataset and usually to estimate the dependent variable, z, the following equation is estimated: z = A i.year i.region.
I decided that I want to use this equation, as my instrument for the following equation: y= B z i.year i.region.
My question is if I should consider using another instrument for my regression since I should not use fixed effects on the first stage, or should I use the fixed effects only on the second stage?
When I write on Stata:
xtset year region
xtivreg y B (z = A), fe
Stata only considers fixed effects for the 2nd stage, right?

Thank you!