The dissertation will be composed of essays exploring the consequences of institutional arrangements on several local outcomes (violence and crime, pension funding, public expenditures and sovereign default) in Mexico and the United States. The first chapter examines how a well-intentioned justice system reform contributed to the spike of violence in Mexico at the beginning of this decade. The second essay will analyze how political cycles in the USA impact subnational pension expenditures and pension funding investment decisions. Political cycles reduce contributions to local pension programs (such as teacher’s, police and firemen) on pre-electoral years. State authorities also have a reduced risk aversion during post-electoral periods. The third chapter studies how incentives in Mexican states generate off-balance-sheet liabilities, which in turn induce sovereign default and a consequent increase in state expenditures.