A few tips and tricks you should know about carnival in Panama (march 4th - 9th):
1. Carnaval is celebrated in the entire country, in every town in every city (maybe not San Blas), but even in Bocas they have Carnaval celebrations.
2. When driving around the interior or around certain neighborhoods, do it with your windows rolled up. This is because the kids just love to throw buckets of water at passing cars (mojadera) or they'll hose you. So don't be alarmed if out of the blue, your car (or you) gets splashed with water.
3. If you decide to go to the interior, don't be surprised that in some towns, you will find "a toll" set up by the town's people, asking for "donations". This is actually cool, because they use the money to clean up after all the people that go to the town, celebrate and leave a big mess behind.
4. Because Friday is the Coronation, many people like to leave on Friday as soon as they get off from work, so expect a lot of traffic on Friday Night leaving the city. The highest amount of traffic will be Friday and Saturday leaving the city (many people work on saturday) and Tuesday and Wednesday coming back.
5. Most people have to be at work at noon on Wednesday, so expect heavy traffic since very very very early wednesday coming back to the City.
6. WARNING: The celebration of carnaval that happens in Panama City is NOT how carnaval is celebrated. That is made-for-television thing that has nothing to do with the actual celebrations nor the traditions. Also, the crowd that goes to the city carnaval is shady. Muggins are not unusual, specially for tourists that go out with their supper cameras.
7. If you want peace and quiet, the beach is the place NOT to go. All the kids, teen agers and college kids will be at the beach, parties all night, blasting music and running around with their loud cars and motorcycles. So if you are going to the beach, a resort would be better than say Coronado.
8. Pay your bills before Friday!! Expect everything in the city to be closed: banks, phone companies, government, etc. So expect long lines on friday at the bank and all service providers.
If I think of any other things, I'll let you know :)
Hope this helps.