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This is a good post, with an excellent exegesis on how to keep an economy flavorful and true to the rules. I think this would be an excellent addition to Pathfinder sourcebook.
I have a few comments:
1) I loved the "fame as currency" aspect, and think that should probably have a mechanical tie-in. Essentially, towns want to have high-powered and benevolent adventurers around because you never know when the next orc horde might appear over yon hill. Adventurers should have reps commensurate with their level, with dictate the sort of treatment they will get. (1st-5th: Will feed for chores; 6th-10th: You can sleep in the hay barn my good sirs!; 11th-15th: hear come the legendary adventurers! Make way! The finest ale for these good people! 16th-20th: please sir, marry my daughters. Yes, all of them. Please stay. Don't leave. Please...) By paying bards well, you might get a rep better than you deserve. Treat bards poorly and it goes the other way (and there should be a separate treatment chart for disreputable adventurers ranging from "Begone varlets!" to "Hide!" to "Oh, gods, just surrender and hope they leave something for the crows!"
2) You kind of buried your rules about magic item creation in the middle there. That was the only real mechanical change and it should have been more prominent (or a separate post)
3) Right now, the game only works if you can feed the "Christmas Tree syndrome". In other words, the game expects people to have a good amount of magic items. Any economics system needs to either a) eliminate magic item dependency -- and I don't think Pathfinder is going that direction or b) explain it. Your system seems to eschew it without eliminating its necessity.