Combine flour, baking powder, cinnamon and nutmeg.
Cream butter, granulated sugar and brown sugar together until light and fluffy.
Add egg yolks, eggnog and vanilla, and beat until smooth. Add the flour mixture and mix until just combined; do not overmix!
Drop by small spoonfuls onto a greased cookie sheet, 2 inches apart. Bake for 11-13 minutes, until bottoms turn light brown.
Remove from oven and allow to rest on the baking sheet for a few minutes before removing them to a wire cooling rack. Once cool, smooth on the frosting and sprinkle with a pinch of nutmeg.
For the eggnog frosting
Cream butter until light and fluffy. Add 1 cup of powdered sugar and mix well.
Add 3 Tbsp of eggnog and mix. Slowly add additional powdered sugar until you reach your desired frosting consistency.