So, You Know The Emerald Currency?

Good point, they would be more useful in determining the supply curve, not necessarily the effects of inflation or deflation. They would be a money sink in terms of identifying and trade taxes though.
The interesting thing about this is that "money sinks" don't really exist IRL. The closest thing you can compare it to is "commodity money", i.e. where a useful resource is used as currency. In Minecraft terms, think of this as using diamonds for currency. They are in limited supply (no complex farms to get infinite diamonds lol), but most importantly they have intrinsic value (better armor and weapons). So because some of that money is at some point going to be converted into useful items, it is less prone to inflation.
Emeralds are technically "fiat money", because you can't make anything useful out of them. Their worth is essentially arbitrary, based on the game telling you that they're worth something. HOWEVER, they have a similar characteristic to commodity money in that (as multiple people have pointed out) you can exchange emeralds for goods and services (identifying/powder stuff would count as services) from NPCs. They are, in a sense, "converting" emeralds into goods like armor, weapons, potions, and the like.
This means that they don't have the characteristic issues of fiat money, and depending on how much trading happens with NPCs, I would argue that they won't be depreciating in value anytime soon. Unless we had a major influx of new players, or we had many more people start lootrunnning or grinding professions, etc etc. There are a ton of factors to consider.

Thank you for coming to my TED talk.

 

who knew the digital economy of a server inside of Minecraft could be so intresting